Discounting and dynamic shelf life to reduce fresh food waste at retailers

Abstract

Approximately 89 million of tonnes of food is wasted every year in the EU along the whole food supply chain. The reasons for food waste by retailers include inappropriate quality control, overstocking and inaccurate forecasting. This study shows that food wasted by retailers can be reduced by discounting old products or by applying a dynamically adjustable expiration date (in other words dynamic shelf life (DSL)). We developed a simulation based optimization model to optimize the replenishment and discounting policy of a retailer who sells meat products. DSL outperforms a fixed shelf life (FSL) in terms of profit, waste, shortages and food safety. Furthermore, replenishment quantities can be higher. The benefits of DSL are greater when demand is low or when the shelf life of products is short. Discounting is a successful strategy to reduce food waste for both FSL and DSL. DSL without discounting is more effective than FSL with discounting. Combining DSL and discounting, allows for a further reduction of food waste.