EURO 2024 Copenhagen
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3326. Definition of the MLOR rule through a bilevel optimization model

Invited abstract in session MB-50: Retail Inventory Management I, stream Retail Operations.

Monday, 10:30-12:00
Room: M2 (building: 101)

Authors (first author is the speaker)

1. Maria João Santos
INESC TEC
2. Sara Martins
INESC TEC
3. Pedro Amorim
Industrial Engineering and Management, Faculty of Engineering of University of Porto

Abstract

The Minimum Life On Receipt (MLOR) rule is established by retailers to impose the maximum age a perishable product can be accepted upon reception. Such a rule tends to be rigid but allowing the rule’s flexibility may bring benefits for both producer and retailer. The objective of this work is to investigate such benefits.
The problem will be represented by a bilevel optimization model where the retailer is the leader, and the producer is the follower. In this problem, the rational response of the producer is to either comply with the fixed MLOR rule imposed by the retailer or offer a discount to the retailer’s orders whenever he/she is willing to adopt a flexible rule.
An instance composed of a perishable product with 3 days of shelf life and a time horizon of 3 periods is used to enumerate all possible solutions for the problem. The solutions are examined in terms of profits and waste generated.
Afterwards, an exact solution method is developed through single-level reformulation aiming to solve the general problem.

Keywords

Status: accepted

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