Research On Ordering Policy For Substitutable And Perishable Commodities

With the development of technology and economic, there are more products similar in function or quality, so the substitutability between products become evident. At the same time the product life cycles become shorter, with certain characteristics of perishable goods. With the consumer demand becoming diversified, the dependency and loyalty on single product or service are coming down. In case of stock-outs, only few consumers will give up buying the products, most of them would choose the function similar products. To research the ordering policy for substitutable and perishable commodities with stochastic demand is of practical significance and theoretical value in increasing retailer's profits and improving the customer's satisfaction.First, the significance and the research background are introduced. According to the present research situation of the domestic and foreign in substitutable products and perishable goods ordering policies, the key content of this paper is put forward, that is ordering policies for substitutable and perishable commodities with stochastic demand containing substitutable rate and price discount.Then the basic ordering models are introduced and the ordering model for one-way substitution and perishable commodities under the stochastic demand containing substitutable rate and price discount is established. The retailer's optimal ordering policy is got through mathematical calculation. It is proved that the retailer will get more profit when they consider the substitution between commodities to order. The effects of the substitutable rate and price discount on the optimal ordering quantity are also analyzed. Next the ordering model for two-way substitution and perishable goods under the stochastic demand is established containing substitutable rate and price discount. The retailer's optimal ordering quantity is got through mathematical calculation. It is also proved that the retailer will get more profit when they consider the substitution between commodities to order.Finally the ordering model for one-way substitution and perishable commodities under the stochastic demand is simulated with MATLAB. We may find out each parameter how to influence the retailer's order quantity directly through the simulation.