Pricing and Ordering Strategies for Fresh Food Based on Quality Grading

Abstract

Fresh food quality grading is the basis of fresh food marketization. On the one hand, it can effectively improve the market efficiency of fresh food and improve the earnings of retailers. On the other hand, it can alleviate the incompleteness of market information and help consumers better identify the quality characteristics of fresh food. To address the issue of quality grading for fresh food, this study constructs a retailer profit model for selling fresh food with two quality grades. Considering the quality level distribution of fresh food and based on the quality selection model, the retailer’s optimal grading, pricing, and ordering of fresh food are studied. Through numerical simulation and sensitivity analysis, some conclusions with managerial implications are drawn. We find that the retailer has the optimal quality grading strategy for fresh food, which is influenced by the minimum quality level and the unit cost of fresh food. Raising the quality standard at the lowest level or reducing the unit cost can help the retailer increase the profits.