Title: Enhanced optimal inventory control policies of perishable products in a retail business: a comparative simulation study under different cost structures

Authors: Naleak Heng; Navee Chiadamrong

Addresses: Logistics and Supply Chain Systems Engineering (LSCSE), School of Manufacturing Systems and Mechanical Engineering, Sirindhorn International Institute of Technology, Thammasat University, Thailand ' Logistics and Supply Chain Systems Engineering (LSCSE), School of Manufacturing Systems and Mechanical Engineering, Sirindhorn International Institute of Technology, Thammasat University, Thailand

Abstract: This paper experiments different replenishment policies of perishable products using simulation-based optimisation approach. The main contribution of this study is to recommend the best replenishment policy and whether enhancing a typical periodic review policy can lead to a better outcome. It was found that enhancing a typical periodic review policy with a backroom and a reorder level can lead to a higher net profit. In some instances, integrating both of them together can outperform implementing them alone, as they can complement each other. The finding also suggests that enhancing the base policy by screening out bad items before reaching the customers may not be so cost-effective if the removed items cannot be sold to generate extra revenue or the loss of goodwill is not the main concern. These findings can help shop managers to make right decisions on the optimal inventory policy in a certain situation under an uncertain environment.

Keywords: perishable products; inventory control; retail businesses; replenishment policies; simulation-based optimisation.

DOI: 10.1504/IJLSM.2019.101795

International Journal of Logistics Systems and Management, 2019 Vol.33 No.4, pp.497 - 524

Received: 08 Jun 2017
Accepted: 29 Dec 2017
Published online: 27 Aug 2019 *

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