On Order Policies for a Perishable Product in Retail

Hendrix, Eligius M.T.; Pauls-Worm, Karin G.J.; de Jong, Maartje V.

doi:10.15388/23-INFOR520

Informatica

On Order Policies for a Perishable Product in Retail

Volume 34, Issue 2 (2023), pp. 271–283

Eligius M.T. Hendrix

Karin G.J. Pauls-Worm

Maartje V. de Jong

https://doi.org/10.15388/23-INFOR520

Pub. online: 1 June 2023 Type: Research Article

Open Access

Received
1 November 2022

Accepted
1 May 2023

Published
1 June 2023

Abstract

We study an inventory control problem of a perishable product with a fixed short shelf life in Dutch retail practice. The demand is non-stationary during the week but stationary over the weeks, with mixed LIFO and FIFO withdrawal. The supermarket uses a service level requirement. A difficulty is that the age-distribution of products in stock is not always known. Hence, the challenge is to derive practical and efficient order policies that deal with situations where this information is either available or lacking. We present the optimal policy in case the age distribution is known, and compare it with benchmarks from literature. Three heuristics have been developed that do not require product age information, to align with the situation in practice. Subsequently, the performance of the heuristics is evaluated using demand patterns from practice. It appears that the so-called STIP heuristic (S for Total estimated Inventory of Perishables) provides the lowest cost and waste levels.

References

Broekmeulen, R.A., Van Donselaar, K.H. (2009). A heuristic to manage perishable inventory with batch ordering, positive lead-times, and time-varying demand. Computers & Operations Research, 36(11), 3013–3018.

Buisman, M.E., Haijema, R., Bloemhof-Ruwaard, J.M. (2019). Discounting and dynamic shelf life to reduce fresh food waste at retailers. International Journal of Production Economics, 209, 274–284.

Chen, F.Y., Krass, D. (2001). Inventory models with minimal service level constraints. European Journal of Operational Research, 134, 120–140.

Chopra, S., Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson Education, Michigan, pp. 528.

Cicatiello, C., Franco, S., Pancino, B., Blasi, E., Falasconi, L. (2017). The dark side of retail food waste: evidences from in-store data. Resources, Conservation and Recycling, 125, 273–281.

Gruen, T.W., Corsten, D.S., Bharadwaj, S. (2002). Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes and Consumer Responses. Grocery Manufacturers of America, Washington, DC.

Herbon, A. (2017). Should retailers hold a perishable product having different ages? The case of a homogeneous market and multiplicative demand model. International Journal of Production Economics, 193, 479–490.

Kiil, K., Hvolby, H.-H., Fraser, K., Dreyer, H., Strandhagen, J.O. (2018). Automatic replenishment of perishables in grocery retailing: the value of utilizing remaining shelf life information. British Food Journal, 120(9), 2033–2046.

Leberorger, S., Schneider, F. (2014). Food loss rates at the food retail, influencing factors and reasons as a basis for waste prevention measures. Waste Management, 34, 1911–1919.

Pantsar, H. (2019). Estimation of Daily Batch Balances of Perishable Products in Retail. Master’s thesis, Aalto University, Finland.

Parfitt, J., Barthel, M., Macnaughton, S. (2010). Food waste within food supply chains: quantification and potential for change to 2050. Philosophical Transactions of the Royal Society B: Biological Sciences, 365(1554), 3065–3081.

Pauls-Worm, K.G., Hendrix, E.M. (2015). SDP in inventory control: non-stationary demand and service level constraints. In: International Conference on Computational Science and Its Applications, LNCS, Vol. 9156. Springer, pp. 397–412.

Sebatjane, M., Adetunji, O. (2021). Optimal lot-sizing and shipment decisions in a three-echelon supply chain for growing items with inventory level- and expiration date-dependent demand. Applied Mathematical Modelling, 90, 1204–1225.

The Consumer Goods Forum (2015). Consumer Goods Industry Commits to Food Waste Reduction.

Thyberg, K.L., Tonjes, D.J. (2016). Drivers of food waste and their implications for sustainable policy development. Resources, Conservation and Recycling, 106, 110–123.

Wyman, O. (2013). Getting fresh: lessons from the global leaders in fresh food. http://www.oliverwyman.com/content/dam/oliver-wyman/europe/germany/de/insights/publications/2015/jan/OW_POV_Getting%20Fresh.pdf.

Biographies

Hendrix Eligius M.T.

https://orcid.org/0000-0003-1572-1436

eligius@uma.es

E.M.T. Hendrix is a full professor at the Universidad de Málaga. His research interests are global and dynamic optimization and computational impacts. He obtained his PhD from Wageningen University and his MSc and Bsc from Tilburg University.

Pauls-Worm Karin G.J.

https://orcid.org/0000-0002-8437-2455

karin.pauls@wur.nl

K.G.J. Pauls-Worm is an assistant professor at Wageningen University. Her main topics are logistics, mathematical modelling and inventory control. She obtained her PhD from Wageningen University and her MSc from the University of Amsterdam.

de Jong Maartje V.

https://orcid.org/0000-0003-3567-5713

maartje.dejong@wur.nl

M.V. de Jong is a junior researcher at the Social Science department of Wageningen University and Research. Her research interests are supply chain management, risk analysis, logistics, inventory control and financial and management. She obtained her BSc from the Technical University in Eindhoven and MSc from Wageningen University.

Full article Related articles

Open access article under the CC BY license.

Keywords

perishable inventory service level order policy

Funding

This work has been funded by Grant PID2021-123278OB-I00 funded by MCIN/AEI/ 10.13039/501100011033 and by “ERDF A way of making Europe”.

Metrics

since January 2020

538

Article info
views

403

Full article
views

347

PDF
downloads

XML
downloads

RSS

Authors

Abstract

References

Biographies

Export citation

Copy and paste formatted citation

Download citation in file