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The influence of sale announcement on the optimal policy of an inventory system with perishable items

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  • Afshar-Nadjafi, Behrouz

Abstract

In this paper a single-period inventory system with a sale announcement for perishable items is investigated. In this problem setting, the perishable product has a deterministic expiry date and a demand with a probabilistic behavior during the period. When the expiry date of the product is approaching, a special sale announcement may alter the customers' behavior and escalate the demand rate preventing huge loss of the expired products. Two model is developed to obtain the optimal order quantity of the product and the optimal time for sale announcement. The first model considers a static price dependent behavior of customers independent from the product’s expiry date, while in the second one the product's demand rate after sale announcement is assumed as an increasing function of its remaining lifetime. Usefulness of the proposed models and the influence of sale announcement on total revenue is demonstrated using numerical examples. Finally, a comprehensive sensitivity analysis is conducted revealing the effect of different parameters of the models on the optimal policy.

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  • Afshar-Nadjafi, Behrouz, 2016. "The influence of sale announcement on the optimal policy of an inventory system with perishable items," Journal of Retailing and Consumer Services, Elsevier, vol. 31(C), pages 239-245.
    • Handle: RePEc:eee:joreco:v:31:y:2016:i:c:p:239-245
    DOI: 10.1016/j.jretconser.2016.04.010
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    1. Afshar-Nadjafi, Behrouz & Mashatzadeghan, Hamidreza & Khamseh, Alireza, 2016. "Time-dependent demand and utility-sensitive sale price in a retailing system," Journal of Retailing and Consumer Services, Elsevier, vol. 32(C), pages 171-174.
    2. Wang, Daao & Dimitrov, Stanko & Jian, Lirong, 2020. "Optimal inventory decisions for a risk-averse retailer when offering layaway," European Journal of Operational Research, Elsevier, vol. 284(1), pages 108-120.
    3. Irfanullah Khan & Biswajit Sarkar, 2021. "Transfer of Risk in Supply Chain Management with Joint Pricing and Inventory Decision Considering Shortages," Mathematics, MDPI, vol. 9(6), pages 1-20, March.
    4. Feng, Cong & Fay, Scott, 2021. "Chief stores officer and retailer performance," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    5. Choi, Kang Jun & Jia, He Michael & Lee, Jae Young & Kim, B. Kyu & Kim, Keunwoo, 2022. "Hedonic myopia: Emphasizing hedonic benefits of non-perishable food makes consumers insensitive to expiration dates in food purchase," Journal of Business Research, Elsevier, vol. 138(C), pages 193-202.

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