Grocery omnichannel perishable inventories: performance measures and influencing factors

Purpose- Perishable inventory management for the grocery sector has become more challenging with extended omnichannel activities and emerging consumer expectations. This paper aims to identify and formalize key performance measures of omnichannel perishable inventory management (OCPI) and explore the influence of operational and market-related factors on these measures. Design/methodology/approach- The inductive approach of this research synthesizes three performance measures (product waste, lost sales and freshness) and four influencing factors (channel effect, demand variability, product perishability and shelf life visibility) for OCPI, through industry investigation, expert interviews and a systematic literature review. Treating OCPI as a complex adaptive system and considering its transaction costs, this paper formalizes the OCPI performance measures and their influencing factors in two statements and four propositions, which are then tested through numerical analysis with simulation. Findings- Product waste, lost sales and freshness are identified as distinctive OCPI performance measures, which are influenced by product perishability, shelf life visibility, demand variability and channel effects. The OCPI sensitivity to those influencing factors is diverse, whereas those factors are found to moderate each other's effects. Practical implications- To manage perishables more effectively, with less waste and lost sales for the business and fresher products for the consumer, omnichannel firms need to consider store and online channel requirements and strive to reduce demand variability, extend product shelf life and facilitate item-level shelf life visibility. While flexible logistics capacity and dynamic pricing can mitigate demand variability, the product shelf life extension needs modifications in product design, production, or storage conditions. OCPI executives can also increase the product shelf life visibility through advanced stock monitoring/tracking technologies (e.g. smart tags or more comprehensive barcodes), particularly for the online channel which demands fresher products. Originality/value- This paper provides a novel theoretical view on perishables in omnichannel systems. It specifies the OCPI performance, beyond typical inventory policies for cost minimization, while discussing its sensitivity to operations and market factors

A disruption production model with exponential demand

In general, production system often gets disrupted due to uncertainty and un-planned events, which also affect demands resulting in less abet-margin of a company. With disrupted production system, management would need to study the variation of demand pattern and disruption of system; we have attempted an effort to establish an exponential demand with the production system and solved analytically the problem to determine production time before and after disruptions. Exponentially demand pattern studied, and also we simulate for sensitivity analysis in order to find which parameter is getting significant change for the proposed model

EOQ inventory model for perishable products under uncertainty

Perishable products require accurate inventory control models as their effect on operations management can be critical. This assumption is particularly relevant in highly uncertain and dynamic markets, as for the ones generated by the pandemic era. This paper presents an inventory control model for perishable items with a demand rate variable over time, and dependent on the inventory rate. The model also considers the potential for backlogging and lost sales. Imperfect product quality is included, and deterioration is modelled as a time-dependent variable. The framework envisages the possibility to define variables affected by uncertainty in terms of probability distribution functions, which are then jointly managed via a Monte Carlo simulation. This paper is intended to provide an analytical formulation to deal with uncertainty and time-dependent inventory functions to be used for a variety of perishable products. The formulation is designed to support decision-making for the identification of the optimal order quantity. A numerical example exemplifies the outcomes of the paper and provides a cost-based sensitivity analysis to understand the role of main parameters

Optimal dynamic pricing and replenishment policies for deteriorating items

Marketing strategies and proper inventory replenishment policies are often incorporated by enterprises to stimulate demand and maximize profit. The aim of this paper is to represent an integrated model for dynamic pricing and inventory control of deteriorating items. To reflect the dynamic characteristic of the problem, the selling price is defined as a time-dependent function of the initial selling price and the discount rate. In this regard, the price is exponentially discounted to compensate negative impact of the deterioration. The planning horizon is assumed to be infinite and the deterioration rate is time-dependent. In addition to price, the demand rate is dependent on advertisement as a powerful marketing tool. Several theoretical results and an iterative solution algorithm are developed to provide the optimal solution. Finally, to show validity of the model and illustrate the solution procedure, numerical results are presented

A replenishment policy for a perishable inventory system based on estimated aging and retrieval behavior

So far the literature on inventory control for perishable products has mainly focused on (near-) optimal replenishment policies for a stylized environment, assuming no leadtime, no lot-sizing, stationary demand, a first in first out retrieval policy and/or product life time equal to two periods. This literature has given fundamental insight in the behavior and the complexity of inventory systems for perishable products. In practice, many grocery retailers have recently automated the inventory replenishment for non-perishable products. They recognize they may need a different replenishment logic for perishable products, which takes into account e.g. the age of the inventory in the system. Due to new information technologies like RFID, it now also becomes more economically feasible to register this type of information. This paper suggests a replenishment policy for perishable products which takes into account the age of inventories and which requires only very simple calculations. It will be shown that in an environment, which contains important features of the real-life retail environment, this new policy leads to substantial cost reductions compared with a base policy that does not take into account the age of inventories

Effective sourcing strategies for perishable product supply chains

Purpose – The purpose of this paper is to assess whether an existing sourcing strategy can effectively supply products of appropriate quality with acceptable levels of product waste if applied to an international perishable product supply chain. The authors also analyse whether the effectiveness of this sourcing strategy can be improved by including costs for expected shelf life losses while generating order policies. Design/methodology/approach – The performance of sourcing strategies is examined in a prototype international strawberry supply chain. Appropriate order policies were determined using parameters both with and without costs for expected shelf life losses. Shelf life losses during transport and storage were predicted using microbiological growth models. The performance of the resulting policies was assessed using a hybrid discrete event chain simulation model that includes continuous quality decay. Findings – The study's findings reveal that the order policies obtained with standard cost parameters result in poor product quality and large amounts of product waste. Also, including costs for expected shelf life losses in sourcing strategies significantly reduces product waste and improves product quality, although transportation costs rise. Practical implications – The study shows that in perishable product supply chain design a trade-off should be made between transportation costs, shortage costs, inventory costs, product waste, and expected shelf life losses. Originality/value – By presenting a generically applicable methodology for perishable product supply chain design, the authors contribute to research and practice efforts to reduce food waste. Furthermore, product quality information is included in supply chain network design, a research area that is still in its infancy

Application of Optimization in Production, Logistics, Inventory, Supply Chain Management and Block Chain

The evolution of industrial development since the 18th century is now experiencing the fourth industrial revolution. The effect of the development has propagated into almost every sector of the industry. From inventory to the circular economy, the effectiveness of technology has been fruitful for industry. The recent trends in research, with new ideas and methodologies, are included in this book. Several new ideas and business strategies are developed in the area of the supply chain management, logistics, optimization, and forecasting for the improvement of the economy of the society and the environment. The proposed technologies and ideas are either novel or help modify several other new ideas. Different real life problems with different dimensions are discussed in the book so that readers may connect with the recent issues in society and industry. The collection of the articles provides a glimpse into the new research trends in technology, business, and the environment

Deterministic EOQ models for non linear time induced demand and different holding cost functions

This paper presents an Economic order quantity (EOQ) model for deteriorating items. The demand rate is non-linear function of time. In this paper two models have been derived for different holding costs (i) The holding cost is linear function of the on hand inventory level. (ii). A non-linear function of time for which the item is kept in the stock. Optimization is done for both the models and numerical examples are presented to check the feasibility of the optimal solutions. Sensitivity analysis is also presented with respect to the various parameters used in the numerical example