Reducing transportation costs and inventory shrinkage in the Washington State tree fruit industry
Name
496822240-MIT.pdf
Description
Full printable version
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30.7 MB
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Checksum (MD5)
d1180e0ae50a655bb659acc12d71ae95
Author(s)
Foreman, James Sterling
Advisor(s)
Chris Caplice.
Date Issued
2009
Publisher
Massachusetts Institute of Technology
Abstract
Perishability and stock-outs are two sources of inventory inefficiency in the Washington State tree fruit industry. This thesis measures the size of these inefficiencies in terms of dollars per box, and describes five solutions, four qualitative and one quantitative, that seek to address them. To establish the magnitude of the inefficiencies, I regress various fruit characteristics on a set of sales data, thereby ascertaining the relationship between a fruit's price and its age. I find that the industry loses 5% to 12% of potential revenue due to perishability and propose four qualitative policies designed to reduce these losses. Next, I develop an operational management tool in the form of a mixed-integer optimization model which can be used to make optimal sourcing decisions during stock-out events. I find that the potential savings from improved sourcing decisions are between $0.01 and 0.02 per box. These results confirm that the costs and foregone revenue associated with inventory management are significant and merit the tree fruit industry's attention.
Description
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2009.
Includes bibliographical references (leaves 91-95).
Subjects
Engineering Systems Division.
MIT Department
Massachusetts Institute of Technology. Engineering Systems Division
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