Inventory Optimisation: Reducing waste, Improving availability

How do big grocery retailers maintain product availability for their customers day after day while minimising food wastage and storage costs? The answer is Inventory Optimisation, the science of maintaining sufficient stock levels of a set of products so that customers see an appropriate level of availability when they walk into your store. The trade-offIt’s hard because it often costs money to maintain a large inventory of products, because of space that is given over to bulky stock as the cost of buying a large amount of potentially expensive items without getting a return on that investment until sale. A long lead time from stocking to use or sale means no value is extracted from those items and that can have cashflow implications for a company while obviously minimising risk of so-called stockout.WastageA significant further complication comes from food and grocery retail where the items being stocked are themselves perishable with varying expiry dates. Further significant costs are incurred if the product expires while still being stocked. This leads to huge food waste problems around the world which in turn have a significant carbon and environmental impact on the direct supply chain for the retailer.With interview guest Dr. Anna Lena-Sachs, Lecturer in Predictive Analytics at the Department of Management Sciences, Lancaster University.https://www.lancaster.ac.uk/lums/people/anna-lena-sachsFurther ReadingAnna-Lena Sach's list of papers (via University of Lancaster)Book: Retail Analytics: Integrated Forecasting and Inventory Management for Perishable Products in Retailing (contents via Springer)Paper: The data-driven newsvendor with censored demand observations (summary via ScienceDirect)Paper: A stochastic model for joint spare parts inventory and planned maintenance optimisation (summary via ScienceDirect)Some links above may require payment or login. We are not endorsing them or receiving any payment for mentioning them. They are provided as is. Often free versions of papers are available and we would encourage you to investigate.Recording date: 29 Jan. 2020Interview date: 24 Jan. 2020Thanks for joining us in the DataCafé. You can follow us on twitter @DataCafePodcast and feel free to contact us about anything you've heard here or think would be an interesting topic in the future.