Impact of pricing and replenishment decisions on food waste at stores and households

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 purchases 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 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 risk. The probability of products’ waste at households is modeled using the quality deterioration of products and the sensitivity of consumers to expired products and food waste. The selling price and the OUTL are determined with the objective of maximizing the expected profit. Our numerical results show that food-waste dynamics and profitability are jointly affected by consumer behavior and inventory policies, rather than pricing alone. By integrating household waste probabilities into retail decision-making, retailers can anticipate cannibalization, design promotions that minimize system-wide waste, and align sustainability with profitability, yielding coordination insights that retailer-only models cannot capture.