Impact of Health Awareness and Price Sensitivity on Inventory Decisions for Organic and Non-Organic Products under Preservation Investment

Driven by post-COVID-19 health awareness, consumer demand for organic food products has surged. As these products lack chemical preservatives, their rapid deterioration necessitates significant investment in specialized preservation technology. To guide retailers managing this complex environment, this study develops a constrained mathematical inventory model for optimizing policies regarding two substitute products, one of which is organic and the other is non-organic. The model advances current literature by uniquely integrating three critical factors: the price differential between the two products, the dynamic impact of health awareness on price-sensitive demand, and the imposition of budgetary restrictions on preservation technology investment. Sensitivity analysis demonstrates that strategically raising consumer health awareness and optimizing preservation investments are effective methods for enhancing overall retailer profitability.