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The pricing policy of perishable supply chain with recycling mode

Author(s): Sheng Qiong-Fen, Li Jing

Many companies offer perishable products to meet diversified demands of customers. Because of the uncertain demand, the ordering quantity is always more than the demand. So suppliers recycle products from the retailers and reproduce for reusing. The early work done on pricing policy of perishable supply chain was about the single product without recycling. The extension of this problem (to consider substitution and recycling) complicates the problem. This paper aims to research the pricing policy of perishable products considering recycling to maximize the supplier and the retailer expected total profits. Considering recycling in two-layer supply chain, this paper establishes the pricing model of substitutable perishable products with game theory, discusses the pricing policy under the centralized and decentralized decision-making. Moreover, this paper also researches the influence of sales cycle time on the sales price and the total profit. At the end, the paper finds the following conclusions. Firstly, the pricing policy under the centralized decision-making is better than under the decentralized decision-making. Secondly, firms get the optimal sales prices and maximize the profit under the centralized decision-making. Finally, the conclusions are illustrated by a numerical analysis.

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