Dynamic Pricing for Managing Product Selling on Fruit Supply Chain Management

Recently fresh fruit sector is grown not only due to increasing of demand that spirited by healthy lifestyle but also requirement of quality food should be eaten daily. Its complexity make many research considered fruit in certain supply chain, called as Fruit Supply Chain (FSC). In FSC, customers tend to purchase products with a longer remaining lifetime and avoid the ones which give aging signal. Customer willingness to pay decreases once the product start to be deteriorated, which may cause slower demand for aging fruits. Consequently, retailers should enable discounted price for aging fruits products to retain or improve demand rate. Hence, a solution of this is creating price that dynamically following the condition of goods. This research establishes pricing scheme, which is dynamic pricing to FSC. Main purpose of this research is explaining how to maximize supply chain profit by applying dynamic pricing. Remind that there is deterioration that does exist on FSC product and its customer preferences, dynamic pricing will be close to the real life particularly applied by FSC players. A set of mathematical model is optimized on this research. It addresses dynamic pricing for FSC players to achieve better profitability. The result proves that dynamic pricing is urgent to be done. In order to avoid unsold product due to became deteriorated, FSC players can separate selling period into three periods, which are forward buying period, normal price period, and markdown price period. Moreover, there are several parameters involved on optimization has different impact on FSC profitability, where it should be thoroughly focused on by FSC players collaboratively

Commodity Price Pass-Through in Differentiated Retail Food Markets

Prices for nearly all basic commodity rose at unprecedented rates throughout early 2008, only to fall nearly as fast as financial markets and global economies began to collapse. Rising food prices in 2008 led to concerns that commodity price spikes would lead to more general food inflation, but by early 2009 interest focused more on the seeming inability of food prices to fall back down with commodity prices. This study provides an empirical investigation into the pass-through of commodity prices to retail prices for two different types of food products: potatoes and fluid milk. The results show that pass-through depends on the nature of the food in question, but is generally consistent with theoretical models of pricing by sellers of multiple, differentiated products. In particular, pass-through rates tend to be lower for processed (differentiated) products during periods of falling input prices than when input prices are rising. For less processed products, pass-through tends to be higher during regimes of both rising and falling input prices. Our results show that pass-through depends on the degree of pricing power possessed by all channel members and, more generally, suggest a nuanced approach to understanding retail food price inflation.commodity prices, conduct, industrial organization, inflation, market power, nested logit, pass-through, random parameters model, Consumer/Household Economics, Demand and Price Analysis, Industrial Organization, C35, D12, D43, L13, L41, Q13,

Three essays on product management : how to offer the right products at the right time and in the right quantity

Across virtually all industries, firms share one common objective: they strive to match their supply with customer demand. To achieve this goal, firms need to offer the right products at the right time and in the right quantity. Only firms that excel in all three dimensions can provide products with a high customer value and achieve extraordinary profits. This thesis investigates specific challenges that a firm has to overcome on its way to a good match between supply and demand. The first essay investigates how a firm can already select the right products during the product development phase. To make good resource allocation decisions, the firm needs to collect valuable information, and incentivize information sharing across the entire organization. The key result is that the firm needs to balance individual and shared incentives to achieve this goal. However, such compensation schemes come at the cost of overly broad product portfolios. The second essay examines how uncertain customer demand patterns affect seasonal products. Specifically, the timing of the product’s availability is crucial. Too early, and high opportunity and inventory costs may devour profits. Too late, and the firm loses its customers. In short, the firm has to balance a product’s market potential with the costly market time. This tradeoff may induce a firm to stock more inventories to satisfy a smaller market potential. Lastly, the third essay investigates how customer substitution influences the inventory decisions of different supply chain members in the presence of upstream competition. We find that customer substitution has a non-monotonic effect on the supply chain members’ decisions, and that left-over inventories may decline even when initial inventories are raised

Retail and Wholesale Market Power in Organic Foods

The demand for organic fresh fruits and vegetable continues to grow at a rate far higher than the rest of the produce industry. The cost of meeting organic certification standards, however, has meant that supply has been slow to adjust. With limited supply, we hypothesize that organic suppliers enjoy more market power in bargaining over their share of the retail-production cost margin for fresh apples. We test this hypothesis using a random parameters, generalized extreme value demand model (mixed logit) combined with a structural model of retail and wholesale pricing that allows conduct to vary by product attributes (organic or non-organic) and time. We find that organic growers do indeed earn a larger share of the total margin than non-organic growers, but this vertical market power is eroding over time as market supply adjusts.organics, market power, mixed logit, game theory, non-linear pricing., Industrial Organization, C35, D12, D43, L13, L41, Q13.,

Market Power in the Carbonated Soft Drink Industry

We investigate the strategic pricing for leading brands sold in the carbonated soft drink (CSD) market in the context of a flexible demand specification (i.e. random parameter nested logit) and a structural pricing equation. Our approach does not rely upon the often used ad hoc linear approximations to demand and profit-maximizing first-order conditions. We estimate the structural pricing equation using four different estimators (i.e. OLS, LIML, 2SLS, and GMM) and compare the implied deviation from Bertrand-Nash competition. Our results suggest that retailers, on average, price CSD brands below their cost, likely a result of the competitive retailing environment. We also find CSD wholesalers price their brands significantly more cooperatively than Bertrand-Nash would suggest, thus inflating profits.Market Power, Carbonated Soft Drinks, Econometrics, LIML, Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Industrial Organization,

Non-cooperative two-echelon supply chains with a focus on social responsibility

open access articleTo cooperate or not is one of the most challenging issues of supply chain management era. If the supply chain is managed optimally, the entire profitability increases. Meanwhile, corporate Social Responsibility (hereafter CSR) is defined as the social and ethical behavior of supply chain members against stakeholders such as shareholders, final customers, employees and executives. Moreover, the observance of the social responsibility obligations is of great importance for consumers and shareholders of companies. The decisions of the supply chain’s members play a direct role in determining the profits of each. These decisions are in conflict with other members in a competitive environment. In this paper, the contradictory variables encompasses the cost resulting from the performance of corporate social responsibility, inventory, shortage, advertising and pricing in a two-level supply chain, consisting a manufacturer and a retailer. After identifying the quantitative variables for measuring the social responsibility using Delphi-Fuzzy methods and Interpretive Structural Modeling, the most important and influential variable of measuring the social responsibility performance (forced labor ratio) has been selected. Subsequently, after modeling the profit function of each player, optimal results were emanated according to the bargaining power of each member and based on Nash and Stackelberg games. Afterwards, with numerical examples, the optimization and sensitivity analysis of social responsibility in each model has been discussed. The results indicate that the profit of manufacturer and retailer reduces by increasing the proportion of forced labor. Based upon Nash equilibrium, the manufacturer’s profit decreases with a slight slope; nonetheless, on retailer and manufacturer leadership models, the profit decreases with a slight increase of the forced labor

Dynamic Explanations of Industry Structure and Performance

Industrial Organization,

Optimal Policies on Managing Drug Supply and Patient Access to Drugs

Health care decision-makers face several uncertainties regarding pharmaceutical products. For new and expensive drugs, the performance outside of clinical trials could be uncertain. For old and low-profit pharmaceutical products, the supply could be uncertain, causing drug shortages. In three essays, I study mitigating strategies to deal with different types of uncertainties associated with pharmaceutical products. In the first essay, I compare two types of pharmaceutical reimbursement contracts to mitigate the uncertainties associated with new and expensive drugs. I construct a game-theoretic model to analyze the interactions between a pharmaceutical manufacturer and a payer. The payer’s reimbursement of a drug is either related to the cost-effectiveness or the sales volume of the drug in the two contracts, respectively. I find key factors that determine the two parties’ preferences for the two contracts. I also find conditions under which each type is preferred by both parties and can achieve a Pareto improvement. In the second essay, I study mitigating strategies for drug shortage, which has become a serious problem in many countries in recent years. I construct a multi-period supply chain model to analyze the interactions between a representative hospital and an unreliable pharmaceutical manufacturer. The hospital owns an in-house manufacturer and can procure the drug from the two manufacturing facilities. I also assume that the hospital can make emergency production. I study the two parties’ procurement and production decisions and examine the impacts of the hospital’s optimal decisions on the external manufacturer’s profit. In the third essay, I study mitigating strategies for drug shortages from the governments’ perspective. I construct a game-theoretic model consisting of a pharmaceutical manufacturer, a wholesaler, and a government. I compare two types of mitigating strategies that the government can implement: providing subsidies to the wholesaler, or using a government-owned manufacturer. I identify key factors for the government’s preference over the two strategies and examine the impact on the private sector. The three essays have theoretical contributions to game theory and supply chain risk management literature and have policy implications for policymakers to manage drug supply and patient access to drugs