Price promotions are an important and widely established retailer's tool to uplift sales, foster cross-selling through increased store traffic and strengthen customer relationships. Retailers hereby face a self-induced dilemma of balancing high product availability and waste. By empirically showing that price promotions are a food waste driver in grocery retail for highly perishable goods, our study helps to address one pressing global social, ecological and economic sustainability issue.

Inefficient food system operations create huge waste for the earth, and cut profit of firms. In this research, we address the simultaneous determination of pricing and inventory control for perishable products to maximize profit. The optimal policy is computationally intractable due to the curse of dimensionality. Instead, we construct a stationary base-stock list-price policy. We show our approximate policy is asymptotically optimal under several parameter regimes.

We study joint replenishment and issuing policy for a perishable product with general lifetime using a periodic review model over a finite horizon. Customers' sensitivity to the remaining lifetime of the unit received is captured by a goodwill cost, which increases as the remaining lifetime decreases. We find that contrary to the case when the issuing policy is fixed (e.g., last-in, first-out policy), the value function in our model is always jointly concave in the on-hand inventory vector.