Racm Rob Broekmeulen

A heuristic to manage perishable inventory with batch ordering, positive lead-times, and time-varying demand

So far the literature on inventory control for perishable products has mainly focused on (near-) optimal replenishment policies for a stylized environment, assuming no lead-time, no lot-sizing, stationary demand, a first in first out withdrawal policy and/or product life time equal to two periods. This literature has given fundamental insight in the behavior and the complexity of inventory systems for perishable products. In practice, many grocery retailers have recently automated the inventory replenishment for non-perishable products. They recognize they may need a different replenishment logic for perishable products, which takes into account e.g. the age of the inventory in the system. Due to new information technologies like RFID, it now also becomes more economically feasible to register this type of information. This paper suggests a replenishment policy for perishable products which takes into account the age of inventories and which requires only very simple calculations. It will be shown that in an environment, which contains important features of the real-life retail environment, this new policy leads to substantial cost reductions compared with a base policy that does not take into account the age of inventories.

Planning and control of rework in the process industries: A review

For all kinds of reasons, rework, i.e. the transformation of products not fulfilling preset specifications into products that do, is an important issue in process industries. Despite a considerable amount of published research on planning and control of rework, and in addition many papers referring to the existence of rework in the process industries, hardly any attention has been paid to the consequences of many process industries specific characteristics for execution, planning and control of rework operations. Here are identified the characteristics of the process industries that influence the possibilities for rework in these industries, based on a framework provided by Flapper and Jensen ( International Journal of Production Research , 1999, to be published). How the available operations management literature assists in determining operational strategies for planning and control of rework in process industries is assessed. It is concluded that many relevant and interesting problems have not been addressed.

Consumer responses to shelf-out-of-stocks of perishable products

Purpose – This paper aims to identify customer behavior with regard to out‐of‐stocks (OOS) of perishable products (focused on bakery bread) and the resulting inventory performance for these perishable products.Design/methodology/approach – Insights on how consumers behave when their preferred bread product is OOS are derived based on 3,800 customer interviews performed in three stores of a large Dutch grocery retail chain. Next to this, additional logistical information was measured on regular moments with respect to the shelf availability per stock‐keeping unit during the day and to waste at the end of the day.Findings – The customer behavior with regard to perishables is observed to be different from that for the non‐perishable items. The key observation is that customers have a high willingness to substitute. The incorporation of the obtained knowledge of the observed consumer buying behavior into the existing automated store ordering (ASO) systems is discussed. In the current ASO systems, no distincti...

The benefit of VMI strategies in a stochastic multi-product serial two echelon system

We consider a multi-product serial two echelon inventory system with stochastic demand. Inventories at the downstream location are replenished periodically using an automatic ordering system. Under vendor managed inventory strategies the upstream stage is allowed to adapt these orders in order to benefit from economies of scale. We propose three different VMI strategies, aiming to reduce the order picking cost at the upstream location and the transportation costs resulting in reduced total supply chain costs. In a detailed numerical study the VMI strategies are compared with a retailer managed inventory strategy for two different demand models suitable for slow moving products. It is shown that if inventory holding costs are low, compared to handling and transportation costs, efficiencies at the warehouse are improved and total supply chain costs are reduced.

Modelling handling operations in grocery retail stores: an empirical analysis

Shelf stacking represents the daily process of manually refilling the shelves with products from new deliveries. For most retailers, handling operations are labour-intensive and often very costly. This paper presents an empirical study of the shelf-stacking process in grocery retail stores. We examine the complete process at the level of individual sub-activities and study the main factors that affect the execution time of this common operation. Based on the insights from different sub-activities, a prediction model is developed that allows estimating the total stacking time per order line, solely on the basis of the number of case packs and consumer units. The model is tested and validated using real-life data from two European grocery retailers and serves as a useful tool for evaluating the workload required for the usual shelf-stacking operations. Furthermore, we illustrate the benefits of the model by analytically quantifying the potential time savings in the stacking process, and present a lot-sizing analysis to demonstrate the opportunities for extending inventory control rules with a handling component.

Improvement Opportunities in Retail Logistics

In this chapter, we have shown that both customer service and the capacity utilization in retail chains can be increased by improving the logistic decisions taken by the retailer. New teclmologies allow the retailers to improve their logistic decisions by increasing either the level of differentiation, the level of sophistication and/or the level of integration in their decisionmaking. In many retail chains, different items need different logistic solutions. In this chapter, we distinguished five product categories: items that are phasing-inlout, items that are on promotion, items that are driving the utilization of capacities, and regular items. All these categories require a different way of controlling the operations. Most ASO systems currently applied are primarily developed for regular items. In this chapter, we describe how these ASO systems can be improved to also support other products. Al though the findings are based on observations at Dutch retailers, discussions with retailers in other countries indicate that most results also apply elsewhere. A final remark can be made on the importance of labor costs in retail chains, and its impact on the focus of Retail Logistics. In many retail chains, we noted that labor costs by far outweigh the inventory holding costs at the operational level (i.e. if the size of the store, the product as sortment and the planograms are fixed). This implies that a major focus of top management in retail chains should be on how to improve labor efficiency. Little scientific research has been done in this area, and so more research is needed to get a better understanding of the factors detennining labor efficiency in stores.