The research, led by Partheeb Mostafiz, Debolina Debnath and Kazi Md Tanvir Anzum, focuses on fast-moving consumer goods with extremely short shelf lives, using packaged bread as its case study. Bread has a commercial shelf life of just 120 hours, and retail scanner evidence indicates that bakery lines exhibit the highest expiration rates of any perishable category, with more than 8% of perishable units expiring before sale and bakery products frequently exceeding 12%. Distributors of such products face a chronic dilemma: overstocking secures service levels but converts edible product into end-of-life waste, while understocking protects margin at the cost of lost sales and customer defection. The problem is sharpest in the traditional-trade channel that dominates South Asian retail, where neighbourhood outlets typically operate without electronic point-of-sale systems, real-time inventory visibility or formal demand forecasting, so replenishment quantities are set judgementally days before demand is realised.

The team’s answer is a dual-channel clearance mechanism they call the Near-Food Channel, or NFC. At a fixed audit point 72 hours after production, any inventory in excess of an optimised threshold, termed the Protection Level, is physically transferred to a separate discount retailer. Because clearance stock is spatially and commercially insulated from the full-price shelf, it cannot cannibalise fresh sales, the very outcome that has discouraged distributors from adopting markdown pricing in the first place. Existing markdown models typically assume that discounted units remain on the primary shelf, where they erode full-price revenue; the new design removes that penalty by construction rather than by pricing cleverness.

Determining how much inventory to protect required a stochastic mixed-integer non-linear programme, solved in GAMS using sample average approximation over 300 Monte Carlo scenarios, and then validated in a Rockwell Arena 14.0 discrete-event simulation of the full 120-hour product lifecycle. Crucially, the two behavioural parameters that govern the policy were estimated from primary data rather than assumed. A structured survey of 217 traditional-trade bread purchasers in Dhaka yielded a freshness decay penalty of 0.72, fitted by non-linear least squares to a power-decay model of willingness to pay, and a clearance-channel price elasticity of 2.85, obtained by log-log regression of conversion rates on relative price. Both parameters entered the models as normal distributions with a standard deviation of 0.05, so that estimation uncertainty propagated through every scenario and replication rather than being suppressed.

The empirical setting was a high-volume retail node in Jatrabari, Dhaka, comprising 20 neighbourhood outlets served by a single distributor. Daily footfall across the catchment was recorded, tested for normality and represented as a normal distribution with a mean of 1,040 customers and a standard deviation of 30, while individual inter-arrival times within the trading day were generated as exponential variates conditional on the realised daily total. The distributor buys each unit at 40 Bangladeshi taka and sells fresh product at 50 taka, the clearance retailer operates on a 10% margin, and reverse logistics cost 0.5 taka per transferred unit. Under the conventional baseline, the manufacturer grants a 2% wastage allowance that reduces the distributor’s effective unit cost to 39.2 taka, an arrangement the authors describe as an implicit subsidy for waste.

The numerical results are striking. In the conventional single-channel system, the model identifies a sharp waste threshold at 2,126 units, the mean quantity the fresh channel absorbs over the lifecycle: below it the entire order sells, and above it every additional unit ordered is wasted. At the maximum tested stocking level of 3,000 units, the baseline produces 874 wasted loaves, a 29.13% waste rate, and a distributor loss of 11,300 taka, with profit turning negative from 2,750 units onward. Both dual-channel scenarios, one applying a constant 30% markdown throughout the clearance window and the other a stepped 20% on Day 4 followed by a further 10% on Day 5, eliminated physical waste entirely across the full range of stocking levels from 1,700 to 3,000 units.

The financial consequences are equally significant. Under the constant markdown, distributor profit stabilises between roughly 19,400 and 20,900 taka at stocking levels where the conventional structure would have lost money, while the stepped schedule performs better still, delivering 20,346 taka at maximum overstock and generating 17% more gross clearance revenue, 23,210 taka against 19,810 taka. The advantage of the stepped policy stems from simple arithmetic: most clearance volume moves on Day 4 at only a 20% reduction, returning 36.36 taka per unit to the distributor rather than the 31.82 taka recovered at a 30% cut, and the deeper discount applies only to the residual. Total ecosystem value rises from 106,300 taka under the conventional structure to more than 142,000 taka under the stepped policy, with the gains drawn from waste that previously accrued to no one rather than redistributed between parties.

A one-at-a-time sensitivity analysis confirmed that the profitability benefit is robust. Doubling and even quadrupling the reverse-logistics cost, and raising the clearance retailer’s margin from 10% to 20%, left waste mitigation efficiency at 100% and reduced distributor profit by at most 7.7%, a consequence of the fact that the recovered salvage value exceeds the transfer cost by a factor of more than sixty at every markdown depth tested. The binding constraints proved to be demand-side rather than cost-side: a 10% reduction in catchment footfall was the single most damaging perturbation, cutting waste mitigation efficiency to 90%, while a 20% increase in the freshness decay penalty reduced it to 92.3%. Even under the worst perturbation, however, distributor profit remained positive, ranging from 5,483 to 23,973 taka against the conventional baseline loss of 11,300 taka at the same stocking level.

Beyond the numbers, the study carries a broader theoretical claim: waste reduction and profitability are complementary rather than competing objectives once the channel structure is right. Prior simulation-based studies achieved waste reductions of 15 to 30% through single-channel discounting and treated the residual as an irreducible cost of service. The present results suggest that this residual is largely an artefact of channel design, because physically separating clearance stock from full-price stock removes the cannibalisation penalty that bounds markdown policies. The framework also dissolves the distributor’s incentive to under-order: with the payoff function flattened and never turning negative, the ordering rule can shift from a conservative quantile of the demand distribution to a service-driven one, and the manufacturer recovers the full wholesale price of 40 taka per unit, worth approximately 2.92 million taka annually to a producer shipping 10,000 units per day.

The practical appeal of the mechanism lies in its low-tech implementability. Because the Protection Level can be expressed as a lookup table indexed by the initial order quantity, front-line warehouse staff can execute the audit and transfer from a printed schedule, requiring no real-time analytics, connectivity or point-of-sale integration, a decisive consideration in exactly the traditional-trade settings where data-intensive waste-reduction approaches have failed to take hold. The authors argue the framework transfers to packaged dairy, ready-to-eat meals, cut produce and pre-packed protein, subject to re-estimation of the behavioural parameters and adjustment of the audit timing. At policy level, they suggest that wastage allowances written into manufacturer-distributor contracts could be discouraged, and that an explicit regulatory category for near-expiry sale with mandatory date disclosure would reduce the legal uncertainty that currently deters clearance retailing. Given that retail accounts for roughly 13% of the 931 million tonnes of food wasted globally each year, a profitable, subsidy-free intervention of this kind offers emerging economies a low-capital complement to the cold-chain investments that have long dominated food-loss strategy.

Subject of Research: Stochastic dual-channel clearance routing to prevent food waste in perishable FMCG supply chains

Article Title: A stochastic dual-channel clearance strategy for food waste prevention in perishable FMCG supply chains

Article References: Mostafiz, P., Debnath, D., & Anzum, K. M. T. (2026). A stochastic dual-channel clearance strategy for food waste prevention in perishable FMCG supply chains. Cleaner Engineering and Technology, 34, Article 101310. https://doi.org/10.1016/j.clet.2026.101310

Image Credits: AI Generated

DOI: 10.1016/j.clet.2026.101310

Keywords: food waste, perishable supply chains, FMCG, markdown pricing, simulation-optimisation, discrete-event simulation, protection level, clearance channel, reverse logistics, cleaner production, Bangladesh, bakery