Inventory dynamics at the retailer—An economic and environmental analysis of packaging fresh produce

Abstract

The use of packaging materials for food products and the associated environmental impact has received increasing attention in public discourse over recent years. At the same time, packaging solutions provide functional properties that help to preserve fresh produce and protect food from external damage. Given these trade-offs, it can be very challenging for retailers to make the right decisions, lowering their environmental impact. This is further complicated by the complex nature of inventory dynamics in the case of perishable products, as multiple factors can impact food waste and the environmental impact at the retailer. This research proposes a simulation model to investigate the effect of packaging as well as a variety of other factors on profit, waste and the environmental impact of products. For this purpose, the environmental impacts of three different products and their corresponding packaging solutions were quantified using a life cycle approach, and a number of experiments considering different demand patterns, service level requirements, batch sizes and order policies were carried out. The findings of this research are manifold, highlighting the importance of considering inventory and packaging decisions within an integrated framework. Moreover, while the shelf life extension obtained from the use of packaging has clear economic benefits due to the resulting lower waste levels, the environmental impact varies depending on the considered products, packaging material and environmental indicator.