Simulation of different reordering policies for optimizing the inventory of perishable food: an Italian case study

Abstract

Abstract Inventory management represents one of the main criticalities that companies have to face. The challenge is twofold: being able to satisfy a demand whose behavior can significantly vary and be unpredictable in order to avoid stock-out situations, whilst limiting excessive stocks and consequently costs. Some factors can complicate this already inherently difficult task. An example is the presence of constraints on the time for storage, which is the typical case for perishable products such as food and beverages, core business of the Italian company subject of the case study described in this paper. To optimize the reorder process in that context, a simulation model was developed for evaluating the potentials of three traditional reordering policies (i.e., Re-Order Point, Re-Order Interval, and (s, S)) to be applied to a set of products managed by the company, including perishable items, and for testing their performance. The items tested were selected through a preliminary ABC analysis, carried out on the volumes handled. A comparison with the current performance of the company’s and that achievable with the optimized policies is proposed.