Evaluation of Inventory Performance for Perishable Products through Simulation

Abstract

Today, one can find that supermarket chains are putting all efforts to control and manage the inventory so that they can decrease cost, improve service quality and increase product availability in order to enhance customer satisfaction. It is relatively easy to control and manage the inventory for non-perishable items, but it is difficult to manage for perishable items with unpredictable demand. The duration of product life cycle, ordering cost, holding cost, stock out cost, overstock cost, demand uncertainty, unit price and product availability play a major role in controlling inventory for perishable items. In this paper, a simulation model is developed using ARENA simulation tool for perishable products to evaluate different inventory performance in the retail stage. A case situation is developed to demonstrate the salient features of the concept.