A mathematical model for perishable products with price- and displayed-stock-dependent demand

- We consider perishable products under shelf and backroom storage capacity constraints.
- We propose an order quantity model with assortment, pricing and shelf space allocation decisions.
- We propose a metaheuristic approach that would maximize the retailer's profit.
- We compare the performance of our algorithm with well-known MINLP solvers.

We introduce an economic order quantity model that incorporates product assortment, pricing and space-allocation decisions for a group of perishable products. The goal is to maximize the retailer's profit under shelf-space and backroom storage capacity constraints. We assume that the demand rate of a product is a function of the selling prices and the displayed stock levels of all the products in the assortment. We propose a Tabu Search based heuristic method to solve this complex problem.