Leveraging economic sanctions to reduce food waste in retail: Insights from a discrete-time simulation approach

Food waste is universally recognized as a critical issue: one-third of the food produced ends up lost or wasted every year according to the 2019 FAO Report. Target 12.3 of the Sustainable Development Goals (SDGs) addresses this issue, urging the UN member states to halve by 2030 the per capita quota of food waste at retail and consumption stages and reduce food loss in production and supply chain. Specifically, food waste results in all the resources used in production, transportation, and storage being consumed in vain. The product wastage in retail amounts to 7% of the total food lost and wasted in Europe. While the percentage of domestic waste is significantly higher (54%), it can be argued that it would be easier to implement measures and regulations and, more importantly, monitor the results achieved, when it comes to commercial establishments, rather than private citizens. In this context, several approaches can be adopted: one is to apply sanctions on unsold products, to deter stores from over-stocking. This measure could be particularly significant in the case of highly perishable items, with high environmental impact and specific costs, such as beef and fish. In this study, the effect of the implementation of sanctions, defined in terms of percentages of the product purchase price from 0% to 100%, is investigated by evaluating the resulting difference in the quantity of products disposed of, and the variations in the optimal replenishment policy. To this end, a discrete-time simulation approach is adopted by modelling a B2C scenario with a single product, periodic review replenishment policy, uniform demand, and deterministic lead time. The results of the study will be of great support to policy-makers, by providing them with the results of a sensitivity analysis of a possible measure aimed at limiting food waste, in line with the SDGs.