Deep Processing And Pricing Decision Of Fresh Agricultural Products Considering Spoilage And Los

The mismatch between supply and demand for fresh products and those that can potentially lead to the risk of spoilage has posed huge losses for industrial companies.To reduce the risk of spoilage of fresh products,some firms have attempted to adopt a deep-processing service to alleviate the imbalance.Therefore,we developed a framework to control the spoilage of the product by taking into account the deep-processing service.First,a differential equation for an inventory model of fresh product and deep-processed product that depended on the selling price and the deteriorating rate was developed.Based on this,a profit model for fresh product and the deep-processed product was developed,and the condition of whether the deep-processing service was required was shown by optimization theory.Furthermore,the existence and its uniqueness of such proportion of deep processing and the selling price of the fresh product were proved.Besides,we further established the dynamic pricing and deep-processing decision-making model of fresh product with the goal of maximizing the profit of the industrial company,and obtained the optimal dynamic pricing and deep-processing strategy by solving the model according to Pontryagin’s maximum principle.Finally,the validity of the theoretical results were verified by numerical examples and sensitivity analysis of key parameters of the model,and some management implications were provided for the pricing and deep processing of fresh product.Research results showed the deep-processing service acted as a buffer against the mismatch between the supply and demand for the fresh product.Industrial companies should make lower profits but a quicker turnover by setting a lower selling price when both the deteriorating rate and initial freshness level are high,and vice versa.As for the dynamic pricing and deep-processing decision-making problems,when the deterioration rate of fresh product is high and the cost of deterioration is high,the lower the price is in in the beginning,the faster the price rises.In the late stage of the sales,the increase of the deterioration rate increases the selling price of fresh product.On the contrary,in the early stage of the sales,the larger the deep processing amount of fresh product and it declines more rapidly over time,while in the late stage of sales,the larger the deterioration rate,the smaller the deep-processing amount of fresh product.Throughout the sales cycle,the selling price of fresh product will decrease with the increase of the product freshness decaying rate,while the deep-processing amount of fresh product will increase.