Food and beverage inventory management: A case study of coffee stores in Ho Chi Minh city

Abstract

The practical lot-sizing issue that a food and beverage corporation has when trying to meet a non-stationary normal distribution demand for a perishable good with a set shelf life is studied in this thesis. In this case, the first expired first out (FEFO) policy is being applied. A certain service level at the lowest possible cost is what the operation manager strives to achieve. The manager also has to consider ordering costs, unit holding costs, costs per unit of loss from spoiling, and transportation costs from warehouse to stores. The order plan for a certain time period indicates how much and when to order. The multi-item, two-echelon lot size problem was converted into a Mixed Integer Linear Programming (MILP) model for optimization in this thesis after the present system had been simulated to determine the issue the firm was having. The suggested model-generated plan concurrently specifies the order-up-to periods for each store, warehouse, and the accompanying order periods. By specifically considering the projected age-distribution of the items in stock for each period, the order-up-to level is adjusted for the expected waste for each time and increased the Gross Margin Return on Investment (GMROI) up to 70%