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

Asghar Hemmati, Behrouz Afshar-Nadjafi and Esmaeil Mehdizadeh

International Journal of Procurement Management, 2022, vol. 15, issue 5, 679-702

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.

Keywords: food products; procurement policy; substitutable products; food control. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijpman:v:15:y:2022:i:5:p:679-702

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