An opaque selling scheme to reduce shortage and wastage in perishable inventory systems

Katsunobu Sasanuma, Akira Hibiki and Thomas Sexton

Operations Research Perspectives, 2022, vol. 9, issue C

Abstract: Effective management of perishable inventory systems is often strewn with challenges, especially when a strong trade-off relationship exists between shortage and wastage of perishables: A smaller inventory increases the chance to lose sales (leading to higher expected shortage cost), while a larger inventory increases the chance to waste perishables (leading to higher expected wastage cost). The root cause of this strong trade-off relationship is high product demand variability. To mitigate the issue and reduce the cost of operating perishable inventory systems, some grocery stores utilize an opaque selling scheme: selling an anonymous product whose brand or exact specification is shielded from customers at the time of sale. The use of opaque products has now become a popular means to reduce shortage/wastage at grocery stores. However, there has been little discussion of the effectiveness of opaque schemes applied to perishable inventory systems.

Keywords: Opaque selling scheme; Perishable inventory system; Base-stock policy; Wastage; Shortage (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:oprepe:v:9:y:2022:i:c:s2214716021000336

DOI: 10.1016/j.orp.2021.100220

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