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Jinntsair Teng - One of the best experts on this subject based on the ideXlab platform.
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inventory policies for perishable products with Expiration Dates and advance cash credit payment schemes
International Journal of Systems Science: Operations & Logistics, 2018Co-Authors: Jinntsair Teng, Ya-lan ChanAbstract:ABSTRACTFor perishable products, the seller usually asks for the buyer to prepay a fraction of the purchasing cost as a good-faith deposit, to pay some cash upon the receipt of the order, and then to offer a short-term interest-free loan (also known as permissible delay or trade credit) on the remaining purchasing cost. In addition, it is evident that the deterioration rate ages to 100% as the Expiration Date is approaching. In this paper, we incorporate the above two important and relevant facts to find the optimal cycle time and the fraction of no shortages such that the total profit is maximised. Several managerial insights are presented. For instance, an increase in Expiration Date (or fraction of credit payment) induces higher values of no-shortage fraction and total profit, while giving a lower value of replenishment cycle. In contrast, an increase in fraction of advance payment causes lower values of no-shortage fraction and total profit, but a higher value of replenishment cycle.
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inventorymanagement for fresh produce when the time varying demand depends on product freshness stock level and Expiration Date
International Journal of Systems Science: Operations & Logistics, 2016Co-Authors: Jiang Wu, Meichuan Cheng, Jinntsair Teng, Chuntao Chang, Faisal B AlkhateebAbstract:ABSTRACTIn today's health-conscience markets, the demand for fresh produce is growing constantly. Additionally, the demand for fresh produce also depends on how fresh it is and the size of its shelf space for displayed stocks which may attract more consumers to buy it. Furthermore, perishable or deteriorating items deteriorates over time and their Expiration Dates are often an important factor in consumers’ purchase decision. As a result, in this paper, we assume that the demand for fresh produce is a time-varying function of its freshness, displayed volume, and Expiration Date. With the demand being freshness-and-stock-dependent, it may be profitable to maintain high stock level at the end of the replenishment cycle. Hence, we relax the traditional assumption of zero ending inventory to non-zero ending inventory. Consequently, the proposed objective is to determine the optimal replenishment cycle time and ending inventory level in order to maximise the annual total profit. Then we prove that the annual t...
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inventory and shelf space optimization for fresh produce with Expiration Date under freshness and stock dependent demand rate
Journal of the Operational Research Society, 2016Co-Authors: Shengchih Chen, Jinntsair Teng, Jie Min, Fuan LiAbstract:It is well documented that the demand for fresh produce, to a great extent, depends on how fresh it is and an increase in shelf space for displayed stocks may induce more purchase of the produce. However, relatively little attention has been paid to the effect of Expiration Date despite the fact that produce deteriorates over time and Expiration Dates are often an important factor in consumers’ purchase decision. In this paper, we propose an economic order quantity model in which we explicitly specify the demand for fresh produce to be a function of its freshness-Expiration Date and displayed volume. With the demand being freshness-and-stock dependent, it may be profitable to maintain high stock level at the end of the replenishment cycle. Hence, we relax the traditional assumption of zero ending inventory to non-zero ending inventory. Consequently, the objective here is to determine the optimal level of shelf space size, replenishment cycle time, and/or ending inventory level in an effort of maximizing the total annual profit. We found that the total annual profit is strictly pseudo-concave with regard to the three decision variables, which simplifies the search for the global solution to a local optimal. Numerical examples are then presented to highlight the theoretical implications and managerial insights.
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inventory and credit decisions for time varying deteriorating items with up stream and down stream trade credit financing by discounted cash flow analysis
European Journal of Operational Research, 2015Co-Authors: Shengchih Chen, Jinntsair TengAbstract:In today's competitive markets, most firms in United Kingdom and United States offer their products on trade credit to stimulate sales and reduce inventory. Trade credit is calculated based on time value of money on the purchase cost (i.e., discounted cash flow analysis). Recently, many researchers use discounted cash flow analysis only on the purchase cost but not on the revenue (which is significantly larger than the purchase cost) and the other costs. For a sound and rigorous analysis, we should use discounted cash flow analysis on revenue and costs. In addition, Expiration Date for a deteriorating item (e.g., bread, milk, and meat) is an important factor in consumer's purchase decision. However, little attention has been paid to the effect of Expiration Date. Hence, in this paper, we establish a supplier–retailer–customer supply chain model in which: (a) the retailer receives an up-stream trade credit from the supplier while grants a down-stream trade credit to customers, (b) the deterioration rate is non-decreasing over time and near 100 percent particularly close to its Expiration Date, and (c) discounted cash flow analysis is adopted for calculating all relevant factors: revenue and costs. The proposed model is an extension of more than 20 previous papers. We then demonstrate that the retailer's optimal credit period and cycle time not only exist but also are unique. Thus, the search of the optimal solution reduces to a local one. Finally, we run several numerical examples to illustrate the problem and gain managerial insights.
Jessica Aschemannwitzel - One of the best experts on this subject based on the ideXlab platform.
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consumer perception and preference for suboptimal food under the emerging practice of Expiration Date based pricing in supermarkets
Food Quality and Preference, 2018Co-Authors: Jessica AschemannwitzelAbstract:Abstract Consumers have been found to majorly prefer ‘optimal’ food over ‘suboptimal’ when purchasing food. To provide an incentive for consumers to select suboptimal food and thus decrease food waste in the supply chain, Expiration Date based pricing is suggested and increasingly applied. However, it is unclear which contextual, individual, and product-related factors impact consumer likelihood of choice and thus acceptance of the practice in the long run. The study aimed at exploring the effect of communicating different motives for purchase, the product being organic, familiarity with the practice, individual preferences, and product-related factors. An online survey experiment among 842 Danish consumers realistically mimicked the current market context. Findings reveal that neither communicating budget saving or food waste avoidance nor the product being organic has an influence. However, there is a gender effect when the practice is communicated as a food waste avoidance action. Consumer’s familiarity with the practice has a significant influence, as has the individual giving importance to the price criterion, age, and education. Food category differences are explored, showing that familiarity and the interaction with gender is observed for milk in particular. Overall, perceived quality and estimated likelihood of consumption at home majorly determine likelihood of choice. Consumer acceptance of Expiration Date based pricing of suboptimal food can be increased through furthering consumer familiarity with the practice, improving perceived quality and providing tips to ensure consumers are confident to be able to use the entire food at home.
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consumer behaviour towards price reduced suboptimal foods in the supermarket and the relation to food waste in households
Appetite, 2017Co-Authors: Jessica Aschemannwitzel, Jacob Haagen Jensen, Mette Hyldetoft Jensen, Viktorija KulikovskajaAbstract:To combat food waste, supermarkets offer food items at a reduced price in-store when they are close to the Expiration Date or perceived as suboptimal. It is yet unknown, however, which considerations consumers engage in when deciding about the offer, and whether focusing particularly on the price during food purchase might be related to greater food waste at home. Knowledge about both the consumers' food purchase process for these price-reduced foods and the potential wastage of price-focused consumers can contribute to the assessment of whether or not offering suboptimal food at reduced prices in-store actually reduces food waste across the supply chain. We explore these questions in a mixed-method study including 16 qualitative accompanied shopping interviews and a quantitative online experimental survey with 848 consumers in Denmark. The interviews reveal that the consumers interviewed assess their ability to consume the price-reduced suboptimal food at home already while in the store. Consumers consider the relation between product-related factors of package unit, Expiration Date, and product quality, in interaction with household-related factors of freezing/storing, household size/demand, and possible meal/cooking. The survey shows that consumers who are more price-focused report lower food waste levels and lower tendency to choose the optimal food item first at home, than those who are not emphasizing the price-quality relation or do not search for price offers to the same extent. Higher age and high education also played a role, and the price-focus is lower in high-income groups and among single households. The findings allow deriving recommendations for retailers and policy makers to support both the marketability and the subsequent actual consumption of price-reduced suboptimal food, but they also raise questions for further research of this underexplored area.
Leopoldo Eduardo Cárdenas-barrón - One of the best experts on this subject based on the ideXlab platform.
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Pricing and lot-sizing policies for perishable products with advance-cash-credit payments by a discounted cash-flow analysis
International Journal of Production Economics, 2017Co-Authors: Ya-lan Chan, Chuntao Chang, Leopoldo Eduardo Cárdenas-barrónAbstract:A contractor often requests a customer pay an advance payment when signing a contract to install a new roof. A cash payment to cover the contractor's materials cost is then required upon delivery of the materials to do the job. Then, the contractor grants the customer a credit payment to pay the remainder of the total cost after the work is completed and satisfactory. Hence, an advance-cash-credit (ACC) payment scheme is commonly used in real world business transactions. This paper develops a supplier-retailer-customer chain in which the retailer receives an upstream ACC payment from the supplier while in return offers a downstream cash-credit (some in cash and the rest in credit) payment to customers. Additionally, today's health-conscious consumers judge product freshness through its Expiration Date because the freshness of a perishable product degrades with time. As a result, the demand for perishable products is influenced by the combined effect of selling price and product freshness linked to Expiration Date. Taking time value of money into consideration, then an inventory model by using a discounted cash-flow analysis is developed. Furthermore, the present value of total annual profit is demonstrated that is strictly concave in unit price and strictly pseudo-concave in replenishment time, which simplifies the search for the global solution to a local maximum. Finally, a sensitivity analysis is conducted and several managerial insights are obtained.
Ali Akbar Shaikh - One of the best experts on this subject based on the ideXlab platform.
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joint pricing and inventory model for deteriorating items with Expiration Dates and partial backlogging under two level partial trade credits in supply chain
International Journal of Production Economics, 2018Co-Authors: Sunil Tiwari, Leopoldo Eduardo Cardenasbarron, Ali Akbar ShaikhAbstract:Abstract This paper develops an inventory model for deteriorating items under a two-level partial trade credit with allowable shortages. This paper considers a supplier-retailer-customer supply chain in which (a) for settling the cost of purchasing, the retailer receives a partial trade credit from the supplier and at the same time the retailer offers a separate partial trade credit to the customer, (b) the downstream credit period not only increases demand but also opportunity cost, (c) the deterioration rate is non-decreasing over time and the product is fully deteriorated close to its Expiration Date, and (d) shortages are allowed. The objective of the problem is to determine the optimal selling price, the optimal replenishment cycle time and the time taken for the inventory to reach zero at the same time such that, the total profit per unit is maximized. Theoretical results are established. A numerical example is provided to illustrate the theoretical results and yield some managerial insights.
Shengchih Chen - One of the best experts on this subject based on the ideXlab platform.
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inventory and shelf space optimization for fresh produce with Expiration Date under freshness and stock dependent demand rate
Journal of the Operational Research Society, 2016Co-Authors: Shengchih Chen, Jinntsair Teng, Jie Min, Fuan LiAbstract:It is well documented that the demand for fresh produce, to a great extent, depends on how fresh it is and an increase in shelf space for displayed stocks may induce more purchase of the produce. However, relatively little attention has been paid to the effect of Expiration Date despite the fact that produce deteriorates over time and Expiration Dates are often an important factor in consumers’ purchase decision. In this paper, we propose an economic order quantity model in which we explicitly specify the demand for fresh produce to be a function of its freshness-Expiration Date and displayed volume. With the demand being freshness-and-stock dependent, it may be profitable to maintain high stock level at the end of the replenishment cycle. Hence, we relax the traditional assumption of zero ending inventory to non-zero ending inventory. Consequently, the objective here is to determine the optimal level of shelf space size, replenishment cycle time, and/or ending inventory level in an effort of maximizing the total annual profit. We found that the total annual profit is strictly pseudo-concave with regard to the three decision variables, which simplifies the search for the global solution to a local optimal. Numerical examples are then presented to highlight the theoretical implications and managerial insights.
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inventory and credit decisions for time varying deteriorating items with up stream and down stream trade credit financing by discounted cash flow analysis
European Journal of Operational Research, 2015Co-Authors: Shengchih Chen, Jinntsair TengAbstract:In today's competitive markets, most firms in United Kingdom and United States offer their products on trade credit to stimulate sales and reduce inventory. Trade credit is calculated based on time value of money on the purchase cost (i.e., discounted cash flow analysis). Recently, many researchers use discounted cash flow analysis only on the purchase cost but not on the revenue (which is significantly larger than the purchase cost) and the other costs. For a sound and rigorous analysis, we should use discounted cash flow analysis on revenue and costs. In addition, Expiration Date for a deteriorating item (e.g., bread, milk, and meat) is an important factor in consumer's purchase decision. However, little attention has been paid to the effect of Expiration Date. Hence, in this paper, we establish a supplier–retailer–customer supply chain model in which: (a) the retailer receives an up-stream trade credit from the supplier while grants a down-stream trade credit to customers, (b) the deterioration rate is non-decreasing over time and near 100 percent particularly close to its Expiration Date, and (c) discounted cash flow analysis is adopted for calculating all relevant factors: revenue and costs. The proposed model is an extension of more than 20 previous papers. We then demonstrate that the retailer's optimal credit period and cycle time not only exist but also are unique. Thus, the search of the optimal solution reduces to a local one. Finally, we run several numerical examples to illustrate the problem and gain managerial insights.
