Simulation-based inventory management of perishable products via linear discrete choice models

• DOI: 10.1016/j.cor.2023.106270
• Publication Date: 2023-05-06T05:52:33Z
• Authors: Daniele Giovanni ...; Leonardo Kanashir...; Paolo Brandimarte
• Keywords: Stockout; Stock (firearms)

Retail inventory management of perishable items, like fresh food, is a relevant and complex problem. It in the light trends towards reduction food waste, because potential cross-sales interaction with other item categories. complex, multiple sources uncertainty supply, demand, quality, complicating factors seasonality within week, FIFO/LIFO consumer behavior, substitutions between possibly stockout. Similar items may be vertically differentiated due to intrinsic which also related age, or brand image, as it could case when retail chain stocks both private label one. In paper, we adapt simple discrete choice model represent consumers' heterogeneity different tradeoffs price apply simulation-based optimization learn ordering rules for two adapted seasonal case, order maximize long-term average profit under lost sales assumption. While well-known constant base-stock policies need not optimal, they are communicate apply. We explore combinations such obtaining some useful managerial insights.