Development of Inventory Model for Perishable Product with Dynamic Pricing

Abstract

Perishable products are products whose value decreases over time. Inventory management for perishable products is a challenge experienced by retailers. Problems arise when inventory costs increase due to a large amount of wasted or waste products. This research aims to maximize profit by providing policy recommendations for inventory procurement under dynamic pricing. This research optimization focuses on determining the optimal order size and reorder level. To solve this problem, a simulation model is created by considering changes in product prices as product quality decreases. The simulation method in this study is a discrete event simulation using simulation software. Events in this inventory simulation include the arrival of customers and the addition or reduction of inventory levels. The replenishment policy in this study is continuous reviews. Simulation scenarios were generated to obtain an optimum order size and reorder level. The best scenario is obtained from a combination of optimum order size and reorder level. An inventory simulation model was generated based on fruit inventory data at one of the major retailers in Indonesia.