Perishable product bundling with logistics uncertainty: Solution based on physical internet

With the increasing popularity of online grocery shopping platforms, more and more retailers are starting to bundle perishable products for marketing advantages. Accidental shortage of bundled perishable products increases both cost and waste. In this research, we propose a physical Internet-enabled real-time system for a retailer that sells two complementary perishable products. Based on the physical Internet data, we consider both bundling and separate policies with repricing strategies. In various model setups, the analytical results show that the physical Internet offers valuable real-time information that generates insights for the retailer especially when the logistics uncertainty is high. Specifically, a higher bundle discount makes the firm tend to adopt bundling policy to increase the market demand. Whereas serious logistics accident occurs, the retailer would rather quickly switch to separate selling policy and reprice the products. We extend the numerical analysis by comparing the profits with and without information captured via Physical Internet to provide managerial guidance when the retailer evaluates the return on investment of such a system.