A mathematical model for pricing perishable goods for quick-commerce applications

A mathematical model for pricing perishable goods for quick-commerce applications | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article A mathematical model for pricing perishable goods for quick-commerce applications milon bhattacharya This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8131323/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Pricing of goods, especially for perishable items is a challenge for the rapidly growing quick-commerce (q-commerce) sector. The relatively short shelf life coupled with large sales volume makes correct pricing challenging. If the seller over-estimates the selling price, goods remain unsold and the seller has to bear a cost for disposal. On the other hand if the seller sets the price too low, it risks losing out on potential revenue. This paper attempts to formalize this problem by modeling the task as a finite-horizon stochastic dynamic problem. Our primary contribution is a basket based multinomial logit (MNL) choice model that attempts to model item substitutability and complementarity using historical orders. We demonstrate that these interactions are determined by the covariance of item co-purchase probabilities as derived from historical orders. Finally, we develop an approximate solution using Approximate Dynamic Programming (ADP) with Value Function Approximation (VFA) and compare the approaches using simulation techniques Management quick commerce pricing models perishable goods Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8131323","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":546024345,"identity":"59791d93-b378-44d6-b8a9-4e399d5b2064","order_by":0,"name":"milon bhattacharya","email":"data:image/png;base64,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","orcid":"https://orcid.org/0000-0002-7382-5797","institution":"Indian institute of Management Visakhapatnam","correspondingAuthor":true,"prefix":"","firstName":"milon","middleName":"","lastName":"bhattacharya","suffix":""}],"badges":[],"createdAt":"2025-11-17 05:21:53","currentVersionCode":1,"declarations":{"humanSubjects":false,"vertebrateSubjects":false,"conflictsOfInterestStatement":false,"humanSubjectEthicalGuidelines":false,"humanSubjectConsent":false,"humanSubjectClinicalTrial":false,"humanSubjectCaseReport":false,"vertebrateSubjectEthicalGuidelines":false},"doi":"10.21203/rs.3.rs-8131323/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8131323/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":96252153,"identity":"39155b1c-d183-4fb0-a6c2-873e62d8f5f7","added_by":"auto","created_at":"2025-11-19 07:40:32","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":2854989,"visible":true,"origin":"","legend":"","description":"","filename":"Amathematicalmodelforpricingperishablegoodsforquickcommerceapplicationsspringernature.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8131323/v1_covered_1ecdcf41-ab96-48af-9da6-77940140f41d.pdf"}],"financialInterests":"The authors declare no competing interests.","formattedTitle":"\u003cp\u003eA mathematical model for pricing perishable goods for quick-commerce applications\u003c/p\u003e","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"Indian Institute of Management Bangalore","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"quick commerce, pricing models, perishable goods","lastPublishedDoi":"10.21203/rs.3.rs-8131323/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8131323/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003ePricing of goods, especially for perishable items is a challenge for the rapidly growing quick-commerce (q-commerce) sector. The relatively short shelf life coupled with large sales volume makes correct pricing challenging. If the seller over-estimates the selling price, goods remain unsold and the seller has to bear a cost for disposal. On the other hand if the seller sets the price too low, it risks losing out on potential revenue. This paper attempts to formalize this problem by modeling the task as a finite-horizon stochastic dynamic problem. Our primary contribution is a basket based multinomial logit (MNL) choice model that attempts to model item substitutability and complementarity using historical orders. We demonstrate that these interactions are determined by the covariance of item co-purchase probabilities as derived from historical orders. 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