Lost sales or scrap losses

Perishable products such as newspapers, magazines and fresh foods are not amenable to conventional stock control methods because demand patterns cannot be estimated from sales, due to the necessarily high levels of stockouts, and because potentially high unsold scrap costs outweigh normal stock holding cost considerations. Policy setting and control for such products is generally managed by pure ‘gut feel’. Recent work in this area has led to a new, more scientific approach, and the results achieved in practice are encouraging.