Displaying and discounting perishables: impact on retail profits and waste

Zümbül Atan

Zümbül Atan
Eindhoven University of Technology

April 30, 16:00 (GMT+3)

Meeting ID: 993 766 4491
Passcode: 525871
Displaying and discounting perishables: impact on retail profits and waste

Perishable products constitute about 30% of total grocery store sales and 56% of store waste. Empirical studies have shown that consumers' purchasing behavior depends on how products of different freshness levels are organized on the store shelves. We explore how a retailer selling a perishable product with deteriorating quality over time can leverage product display to maximize profit and reduce waste. We use an infinite-horizon periodic-review stylized model to optimize product display, discount rate and order quantity for a product with a two-period shelf life, which is fresh in the first period and old in the second period. We find that going from selling only fresh products to selling them alongside old products at an optimized discount using an optimized display setting increases profit by 5.13% and decreases waste by 78.93% on average.  Moreover, our results reveal that selling discounted old products via the right display setting can be a win-win proposition for the retailer who can simultaneously increase profits and reduce waste.

Zumbul Atan is Associate Professor of Supply Chain Management in the OPAC group (Operations, Planning, Accounting and Control) of the Department of Industrial Engineering and Innovation Sciences at Eindhoven University of Technology (TU/e). She is the Research Director of the European Supply Chain Forum. Zumbul's research is broadly focused on multi-echelon inventory theory, retail operations and revenue management. Zumbul has conducted a large number of projects with industry. Her research is published in leading OM journals (including Manufacturing & Service Operations Management, Production and Operations Management, IISE Transactions, Naval Research Logistics, European Journal of Operational Research). Zumbul is the chair for the Dutch Operational Management and Logistics Conference and the Vice President of Meetings of the POMS College of Supply Chain Management. She is the Department Editor of OR Spectrum’s Supply Chain Management Department. Zumbul has been in the scientific committees of multiple international conferences. She has earned multiple university- and departmental-level teaching awards.

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