Dynamic Clearance Strategies for Highly Perishable FMCG Products: A Stochastic Dual-Channel Approach for Cleaner Logistics and Supply Chain

Abstract

In the fast-moving consumer goods (FMCG) industry, there are many difficulties in managing highly perishable products, resulting in high food waste and financial losses. In this study, the common “oversupply undersupply” problem of 120-hour shelf-life products have been explored and a dual channel “Near Food Channel” (NFC) clearance strategy is recommended. We develop a two-step simulation optimization approach. A Stochastic Mixed Integer Non-Linear Programming (SMINLP) model with Sample Average Approximation (SAA) is formulated in GAMS. This model computes the mathematically optimum Protection Level (PL). Since it is known that there are some limitations of the continuous models in capturing the discrete consumer behavior, these  values were taken and fine-tuned using Discrete Event Simulation (DES) using Rockwell Arena 14.0 software. Empirical stochastic inputs like a Freshness Decay Penalty ( = max (0.1, N (0.72, 0.05))) and Price Elasticity ( = max (0.1, N (2.85, 0.05))) were incorporated to study the probability of fresh and clearance channel conversions. The results indicate a 100% Waste Mitigation Efficiency () for all tested inventory levels (1,700-3,000 units) when an aging inventory is being routed at a critical time (72 hours) using dynamic markdown strategies. This framework cuts down on physical waste, saves the profits of distributors (18,623 – 19,426 BDT profit compared to -11,300 BDT loss in conventional operations at =3000). Also, there is no wasted material left, so the typical 1-3% wastage allowance that manufacturers offer distributors is not needed. It's a win-win-win situation: reduced food waste, increased profits, and a healthier, more sustainable food supply chain.