1 optimization problems
A neighborhood greengrocer, a local bakery, a butcher's shop, a fish counter, a fresh dough or ready-meals workshop, or a restaurant supplier — every day or every shift faces the question 'how much do we make or buy today?' Three realities apply: (1) the product either spoils by end of day or has a very short shelf life, (2) demand swings by day, weather, and promotion, (3) the order is placed once; under-order means stockouts, over-order means selling at a loss or throwing away. The decision is mathematical: the ratio of lost-sale cost to spoilage cost is the key parameter driving the order quantity. When the decision is made as 'last week we sold this much, let's take a bit more,' annual shrinkage rises to 8–20% and lost-sale rate to 5–15%.