Strategy to avoid food waste: Trade-off between food donations and discounting

Date

2025-9-01

Author

Akgüneş, Ayser

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The growing environmental and economic concerns on the issue of food waste push retailers and governments to take action. Under the regulatory mechanisms and changing customer trends towards sustainable goals, retailers face the pressure to decrease or eliminate food waste while maintaining profitability. In this thesis, we analyze two major food waste mitigation strategies for a retailer who sells a perishable product that depreciates over its two periods of lifetime, under regulatory policies: markdowns and food donations. We study two models: the Discount and Donation Allocation (DDA) and a benchmark model for both independent demands and correlated demands. In the DDA model, the retailer decides on a fresh order quantity and a donation quantity, whereas in the benchmark model, another retailer practice is reflected, in which the retailer decides only the fresh order quantity, marks-down all depreciated items, and then salvages unsold depreciated units via donation at end-of-life. We include disposal costs and tax credits as regulatory instruments to our study. In the model framework, at the beginning of a period, the retailer sees the inventory of depreciated products and decides on a fresh order quantity and a quantity to donate from the beginning inventory of depreciated items. The rest of the inventory is offered for sale at a discounted price in the next period. We analytically characterize the retailer's optimal fresh item ordering policy and optimal donation policy for DDA and benchmark models. We also perform a numerical study to make comparisons on the environmental and economic outcomes.

Subject Keywords

Retail food waste, Perishable inventory management, Donations, Sales at a discounted price, Government regulations on food waste

URI

https://hdl.handle.net/11511/116074

Collections

Graduate School of Natural and Applied Sciences, Thesis