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IoT-Enabled Quality-Triggered Markdown Pricing for Perishable Food: Equity and Waste Implications.

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Summary

Internet of Things (IoT) quality monitoring enables earlier, deeper markdowns on perishable foods. This reduces waste and expands access to affordable, nutritious food for price-sensitive consumers without harming retailer profits.

Keywords:
Internet of Things (IoT)dynamic pricing and markdownsfood access equityperishable food supply chainsquality-sensitive demand

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Area of Science:

  • Operations Research
  • Supply Chain Management
  • Food Science

Background:

  • Inequitable food access is exacerbated by delayed markdowns on perishables, increasing waste.
  • Current markdown strategies limit affordability gains and fail to prevent spoilage.

Purpose of the Study:

  • To examine how Internet of Things (IoT) real-time quality monitoring can optimize markdown strategies.
  • To assess the impact of quality-triggered markdowns on food waste and food equity.

Main Methods:

  • Developed an analytical pricing and markdown model for perishables with quality-sensitive demand.
  • Compared optimal pricing decisions under IoT-enabled quality observability versus a baseline without IoT.
  • Established convexity and derived closed-form solutions for optimal pricing and markdown parameters.

Main Results:

  • Continuous quality visibility leads to earlier, deeper markdowns while product quality is still acceptable.
  • Increased sell-through of products before they become unsalable.
  • Quantified waste reduction and an expanded window for affordable purchases by price-sensitive consumers.

Conclusions:

  • Proactive, quality-aligned pricing policies supported by IoT enhance food equity.
  • Retailer profitability is maintained, demonstrating the economic viability of the approach.
  • IoT integration offers a pathway to simultaneously reduce food waste and improve access to affordable nutrition.