Developing new forecasting accuracy measure considering Product's shelf life: Effect on availability and waste

The purpose of this study is to propose a measure for evaluating forecast accuracy that incorporates the asymmetrical impact of fresh food products’ (FFPs) shelf-life. The proposed measure is compared against traditional forecast accuracy measures in terms of the effect on availability (i.e. fill-rate), inventory building (i.e. freshness) and FFP expiration (i.e. waste). A case study of one of Denmark's largest grocery wholesalers was used to identify the asymmetrical impact of over-/under-forecasting for 17 FFPs, followed by a simulation to investigate the effect of using the proposed measure. Findings show that including the shelf-life and the asymmetrical impact of over-forecasting with/without price reduction gives marginally lower fill-rate but an improved freshness of FFPs and a lower inventory level. This study adds to current literature on forecast accuracy measures by focusing on forecasts used for inventory control of short shelf-life FFPs, where ensuring a high level of freshness and a low level of waste is critical.