Optimal Discounting and Replenishment Policies for Perishable Products

Chua, Geoffrey A.; Mokhlesi, Reza; Sainathan, Arvind

doi:10.1016/j.ijpe.2017.01.016

Cited by 31 publications

(15 citation statements)

References 28 publications

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“…Under the FIFO consumption policy, a mixed integer programming model is developed to decide on the optimal lot sizing strategy while satisfying a fill rate constraint. Other works tackled lot sizing problems for perishable products of fixed shelf life under the assumption of a stochastic demand, including Kanchanasuntorn and Techanitisawad, 2006 , Olsson and Tydesjö, 2010 , Muriana, 2016 , Chua et al, 2017 , Janssen et al, 2018 . For a more comprehensive synopsis of inventory models for perishable products, interested readers are referred to the review works of Pahl and Voß, 2014 , Chaudhary et al, 2018 .…”

Section: Relevant Literaturementioning

confidence: 99%

Sustainable dynamic lot sizing models for cold products under carbon cap policy

As’ad

Hariga

Shamayleh

2020

Computers & Industrial Engineering

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Highlights A cold product exhibiting a discrete time varying demand is considered. Two models are presented one for the total carbon cap and the other for periodic cap. A lagrangean relaxation and a bi-section method based algorithms are developed for Model 1. Model 2 is solved via a dynamic programming based algorithm. Sensitivity analysis is performed on the effect of the preset total and periodic caps.

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Section: Relevant Literaturementioning

confidence: 99%

Sustainable dynamic lot sizing models for cold products under carbon cap policy

As’ad

Hariga

Shamayleh

2020

Computers & Industrial Engineering

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“…Their study revealed that pricing strategies lead consumers to strategically behave in purchasing perishables affected by willingness to pay. Chua et al [24] developed optimal discount and replenishment strategies for a retailer selling a perishable product with uncertain demand. They investigated the optimal timing and discount rate and replenishment policy for aged perishable products.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Studies have also considered strategic consumer demand to develop an optimal dynamic pricing for perishable products [13][14][15][16][17]. The models developed in these studies are focused on general perishable products, and earlier studies have also focused on developing pricing and inventory models for perishable foods [18][19][20][21][22][23][24][25][26]. These studies used stochastic consumer demands such as myopic, strategic, and price-dependent demand assumptions, which have not considered the realistic situation when consumers actually purchase perishable foods.…”

Section: Introductionmentioning

confidence: 99%

Effective Pricing of Perishables for a More Sustainable Retail Food Market

Chung

2019

Sustainability

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Developing effective ways to manage perishable foods is crucial for food retailers to survive in the highly competitive retail food industry. Due to the nature of perishability, it is necessary to find an effective selling strategy to reduce waste from unsold perishables. Prior studies have proposed using dynamic pricing to develop an optimal pricing structure that compensates the consumer for the loss of freshness as the expiration date approaches. However, these studies have not considered consumer demand that more consumers are likely to purchase units of perishable products with relatively more or fewer days before expiration. In addition, prior studies have not compared dynamic pricing to a "no discount" policy whereby a retailer only displays those perishables that have the fewest remaining days to expiration, keeping units with a longer time before expiration in a warehouse. The results of this study show the potential impacts of different pricing by considering these issues. This study provides new insights for retailers to manage perishable foods with small and large packages that improve the sustainability of food retailing.

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“…Studies on VOI gained through implementing RFID in perishable inventory management by Ketzenberg et al (2015) and dynamic expiration dates by Gaukler et al (2017) report up to 43.2% and 41.2%, respectively, in cost reductions on average with a 1 day lead time [32,33]. Chua et al (2017) explore optimal discounting and replenishment policies for products with mean shelf lives of 2 days, and found that discounts are best offered when inventory units are below a certain age class [34]. Adenso-Diaz et al (2017) and Buisman et al (2017) also present studies on using dynamically-set shelf life and offering dynamic pricing based on remaining life [35,36].…”

Section: Value Of Informationmentioning

confidence: 99%

The Value of Demand Information in Omni-Channel Grocery Retailing

Siawsolit¹,

Gaukler²

2019

Proceedings of the Annual Hawaii International Conference on System Sciences

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As e-commerce reaches one of the last strongholds of traditional fulfillment, how can grocers leverage the omni-channel trend and stay competitive in today's changing market landscape? To improve operating outcomes and address food waste concerns, this study investigates various scenarios in which the grocery retailer accepts online orders in advance. We examine the value of advance demand information through a Markov Decision Process-based model, in terms of changes to expected profits, outdating, freshness, and several inventory and service performance metrics. Our results indicate that when the demand lead time is longer than the replenishment lead time, close to 20% safety stock reduction on average can be achieved, leading to a 15% decrease in product deterioration and 26% less outdating. In some cases, we also find that it is possible to profitably offer discounted prices in exchange for the customer's future demand information.

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Optimal Discounting and Replenishment Policies for Perishable Products

Cited by 31 publications

References 28 publications

Sustainable dynamic lot sizing models for cold products under carbon cap policy

Sustainable dynamic lot sizing models for cold products under carbon cap policy

Effective Pricing of Perishables for a More Sustainable Retail Food Market

The Value of Demand Information in Omni-Channel Grocery Retailing

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