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Optimal procurement decisions for food products in a retailing system with variety dependent demand

Author

Listed:
  • Asghar Hemmati
  • Behrouz Afshar-Nadjafi
  • Esmaeil Mehdizadeh

Abstract

In the food industry, acquiring a lion's share of the market is a key factor in a company's success. Offering similar substitutes instead of the requested stocked-out products has been an alternative to keep customers. In this paper, an economic ordering model with substitutable food products is investigated. Each product has its own initial constant demand which will be increased when inventory of the other products would be depleted. Similarity measures and quality of the principal request and its substitutes depends on any typical customer with its own information. Time intervals are considered as decision variables and the conditions which in closed form expression of the optimal solution are achievable are derived. Furthermore, the impact of the models' parameters on the optimal solution was investigated. It was clarified that a marginal increase in the unit profit of each food product has a positive impact on the total profit and the order quantity.

Suggested Citation

  • Asghar Hemmati & Behrouz Afshar-Nadjafi & Esmaeil Mehdizadeh, 2022. "Optimal procurement decisions for food products in a retailing system with variety dependent demand," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 15(5), pages 679-702.
    • Handle: RePEc:ids:ijpman:v:15:y:2022:i:5:p:679-702
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