1949. Impact of pricing and replenishment decisions on food waste at stores and households
Invited abstract in session TB-47: Avoiding Food Waste, stream Retail Operations.
Tuesday, 10:30-12:00Room: Parkinson B08
Authors (first author is the speaker)
| 1. | Bouchra BACHA
|
| LGI, CentraleSupélec, Paris-Saclay University / Kedge Business School | |
| 2. | Yann Bouchery
|
| Center of Excellence in Supply Chain (CESIT), Kedge Business School | |
| 3. | Mohamed Zied Babai
|
| BEM-Bordeaux Management School | |
| 4. | Zied Jemai
|
| Laboratoire Genie Industriel, Ecole Centrale Paris |
Abstract
A strategy often used by retailers to reduce in-store waste of perishables consists of discounting the less fresh products. However, this strategy can lead to excessive purchase of less fresh products, which ends up in household waste disposal. The perishable inventory literature often ignores this phenomenon, i.e., the waste at households, by considering only in-store waste. In this article, we investigate the impact of the selling price and ordering decisions on food waste at the store and in households for perishable products with fixed lifetime. We consider a periodic order-up-to-level (OUTL) inventory control policy where the demand is modeled using customer choice behavior derived from a utility function that incorporates household waste. The selling price and OUTL are determined with the objective of maximizing the expected profit. Through a numerical investigation, we show that setting the right order-up-to level and pricing increases the profit by 4% and reduces the total food waste by 21%. Moreover, we show that raising consumer awareness of food waste has a positive impact on the store profit, which increases by 17%, and on consumer consumption, with a 34% reduction in household waste, and on the environment, with a 12% decrease in the total waste.
Keywords
- Inventory
- Supply Chain Management
- Revenue Management and Pricing
Status: accepted
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