Customer service: the distribution of seasonal food products under risk

Abstract

Addresses important logistical considerations in the distribution of a seasonal food product. While continued attempts have been made to maintain high levels of customer service within the food industry, the degree of uncertainty in the distribution channel itself often undermines management’s efforts to procure adequate stock of product during peak demand season. Develops a stochastic dynamic programming formulation which may serve as a decision‐support tool for managers faced with procuring product in a distribution channel in which receipt quantities are probabilistic. Provides numerical results, supporting the intuitive result that expected costs and the length of the required planning horizon are inversely related to the level of uncertainty in the distribution channel.