A Model for Fresh Produce Shelf-Space Allocation and Inventory Management with Freshness-Condition-Dependent Demand

A significant amount of work has investigated inventory control problems associated with fresh produce. Much of this work has considered deteriorating inventory control with many models having been proposed for the various situations that exist. However, no researchers have specifically studied fresh produce which has its own special characteristics. Most research categorise fresh produce into more general deteriorating categories with random lifetimes and nondecaying utilities. However, this classification is not reasonable or practical because the freshness condition usually plays a very important role in influencing the demand for the produce, which drops gradually over time. In this paper, a single-period inventory and shelf space allocation model is proposed for fresh produce. These items usually have a very short lifetime. The demand rate is assumed to be deterministic and dependent on both the displayed inventory (the number of facings of items on the shelves) and the items’ freshness conditions. The freshness condition drops continuously over time according to a known function. Several problem instances of different sizes are given and solved by a modified generalised reduced gradient (GRG) algorithm.