Price cut policy on food delivery service application using dynamic pricing model to maximize profit on restaurant

Grace Elfrida Sylvana Napitupulu*, Ari Yanuar Ridwan, Budi Santosa

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Dynamic pricing is a pricing tool used to adjust prices to respond to market fluctuation and demand uncertainty. Inside the restaurant industry, common dynamic pricing strategy adopted is the pricing cut policy. The purpose of this study is to propose a pricing cut policy obtained from dynamic pricing model optimization in order to maximize profit on a restaurant through a partnership with online food delivery services. In the first phase, we determine menu items that the pricing cut will be applied to using menu engineering, one of the methods used in the restaurant industry to evaluate menu items performance. In the next phase, we forecast demand for the next period by modeling the effect of price on sales history. In the third phase, the demand model is substituted into the dynamic pricing model, which is then optimized by using non-linear programming method. The optimization result shows that the proposed model can increase restaurant revenue up to 28% compared to historical revenue. This study can be used as a tool to make decisions related to pricing on online food delivery services.

Original languageEnglish
Title of host publication2nd International Conference on Design, Energy, Materials and Manufacture 2021, ICDEMM 2021
Editors Asral, Yogi Rinaldi Ginting, Dewa Ngaken Ketut Putra Negara, Musthafa Akbar, Syafri, Kaspul Anuar, Muftil Badri
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735444188
DOIs
Publication statusPublished - 14 Mar 2023
Externally publishedYes
Event2nd International Conference on Design, Energy, Materials and Manufacture 2021, ICDEMM 2021 - Pekanbaru, Indonesia
Duration: 4 Aug 2021 → …

Publication series

NameAIP Conference Proceedings
Volume2568
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference2nd International Conference on Design, Energy, Materials and Manufacture 2021, ICDEMM 2021
Country/TerritoryIndonesia
CityPekanbaru
Period4/08/21 → …

Fingerprint

Dive into the research topics of 'Price cut policy on food delivery service application using dynamic pricing model to maximize profit on restaurant'. Together they form a unique fingerprint.

Cite this