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The impact of order patterns on inventory performance for highly perishable products

Møst, H.P.S. (2017) The impact of order patterns on inventory performance for highly perishable products. Master's Thesis / Essay, Industrial Engineering and Management.

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In this IEM research project we consider a 3-echelon perishable supply chain, with the focal inventory being a retailer distribution center (DC). The supply chain is based on an existing supply chain of a major Dutch grocery retailer. One of the challenges that retailers face when managing their DCs is to ensure that store demand, of highly perishable products, is always met. Since highly perishable products have a shelf life of one week or less, it is important that the DCs are supplied multiple times a week. This entails that orders at suppliers and subsequent deliveries also occur multiple times a week. However, it is not known what the performance effects are if order placement is constricted to weekdays. We expand on current knowledge by focusing on four weekly order patterns with lead time and shelf life constraints. In order to investigate different order patterns, we have used discrete event simulation based on a perishable inventory model. We adopted an existing perishable order policy that was developed for the grocery retail to determine order quantities. The orders are based on an order-up-to level that also takes into account expected waste and pipeline inventories. Empirical demand from actual retailers was used to determine expected daily demand and actual daily demand. The results show that inventory performance for each order pattern was largely dependent on shelf life length, which is expected. For shelf lives that are shorter than one week, each order pattern show large differences in performance and order behavior. We found that for different ranges of shelf life, there are order patterns where performance is close to optimal. The main limit between each pattern is the time horizon over which an order quantity is determined. In addition, we found that when using different daily order-up-to levels, the structure of the order pattern plays a major role in not only the amount of waste, but also how well demand is met. These findings give new insight for both for the field of perishable inventories and for the management of highly perishable inventories.

Item Type: Thesis (Master's Thesis / Essay)
Degree programme: Industrial Engineering and Management
Thesis type: Master's Thesis / Essay
Language: English
Date Deposited: 15 Feb 2018 08:31
Last Modified: 15 Feb 2018 08:31

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