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Development and analysis of static and dynamic pricing models for fresh fruit and vegetable retailers with food waste as a key consideration

Tusa, Olivia C.
Master thesis
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masterthesis.pdf (2.149Mb)
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https://hdl.handle.net/11250/2786897
Utgivelsesdato
2021
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  • Master Thesis [3749]
Sammendrag
Fresh fruit and vegetable waste at retail locations is widely prevalent and often

accepted as a byproduct of food retailing. To recognize this source of food waste and

encourage change, the United Nations has introduced a goal to halve per capita food waste at

the retail level by 2030 (‘United Nations’, 2020). As retailers begin to turn their focus to an

all-encompassing triple bottom line, they have the opportunity to rethink their approach to

food waste. This research explores various retailer optimization methods to combat the food

waste of highly perishable items by utilizing the mathematical programming technique of

decision modelling. The models developed provide evidence that operating under a static

product pricing model with a singular objective to minimize waste is not a sustainable

approach for retailers as it neglects profits. Further, the inclusion of a financial weight on waste

in a profit maximizing business model with static pricing is presented as a more financially

effective approach. However, this model is also a likely unsustainable option due to the

modelled decrease in profits. Lastly, dynamic pricing by way of markdown management is

presented to offer food retailers a more sustainable method to sell fresh fruit and vegetables

with less waste. Of the four models presented, the Dynamic Pricing Model appears to be the

most applicable model for retailers and should be considered as an approach to reduce waste

among perishable items such as fresh fruits and vegetables.

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