Strategy to Avoid Food Waste: Trade-off between Food Donations and Discounting

Ayser Akgüneş

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 study, 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. 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. (joint work with Özgen Karaer and Zeynep Pelin Bayındır)

Short Bio

Ayser Akgüneş is currently a research assistant at the Department of Industrial Engineering at Middle East Technical University (METU). She obtained both her B.Sc. and M.Sc. degrees from the same department, and also holds a minor degree in Economics. Her master’s thesis, titled “Strategy to Avoid Food Waste: Trade-off Between Food Donations and Discounting,” focuses on perishable inventory management under regulatory mechanisms such as tax credits and disposal costs. Her research analyzes two major food waste mitigation strategies — discounting and donation — and investigates their economic and environmental impacts through analytical and numerical models. Her research interests include sustainable operations management, stochastic inventory models.

Venue

Friday, October 10, 2025, 4.00 pm

IE Building, Halim Doğrusöz Auditorium (IE 03)