We investigate the package size and pricing decisions of a retailer selling a perishable product in packages of a fixed pre-set size or in bulk, that is, from containers which allow customers to buy the exact quantity they wish. Using this model, we answer questions such as: how does the existence of a bulk sale option affect the optimal package size and price? How does it impact the retailer’s profit? How effective is a bulk sale option at reducing waste at the consumer level? We show that, contrary to popular beliefs, the existence of a bulk sale option at the retailer’s may not always be environmentally beneficial as it may, in some cases, lead to more waste at the consumer level.
Professor Dorothée Honhon is an Associate Professor of Operations Management at the Jindal School of Management of the University of Texas at Dallas. She received her Undergraduate and Master’s degrees in Business Administration from the University of Liege, in Belgium and a Ph.D. in Operations Management from New York University. Her research interests include retail operations, assortment planning, and sustainability (in particular, waste reduction). She has published papers in journals such as Management Science, Operations Research, MSOM and POM. She is on the editorial board of Management Science, POM and 4OR. She is the President of the POMS College of Supply Chain Management and the Past President of the Women in OR/MS (a.k.a. WORMS) forum of INFORMS.