  Effective management of perishable inventory systems is often strewn with
challenges, especially when a strong trade-off relationship exists between
shortage and wastage of perishables: A smaller inventory increases the chance
to lose sales (leading to higher expected shortage cost), while a larger
inventory increases the chance to waste perishables (leading to higher expected
wastage cost). The root cause of this strong trade-off relationship is high
product demand variability. To mitigate the issue and reduce the cost of
operating perishable inventory systems, some grocery stores utilize an opaque
selling scheme: selling an anonymous product whose brand or exact specification
is shielded from customers at the time of sale. The use of opaque products has
now become a popular means to reduce shortage/wastage at grocery stores.
However, there has been little discussion of the effectiveness of opaque
schemes applied to perishable inventory systems.
  In this paper, we propose an opaque scheme based on the balancing policy on
demand, which tries to average out orders for products. We confirm both
analytically and numerically that this opaque scheme effectively reduces
product demand variability, thereby reducing both shortage and wastage for
perishable inventory systems under a base-stock policy. We also present an
analytical formula that reveals insights into the opaque scheme: The ratio
between the opaque proportion and the coefficient of variation of product
demands plays a key role to determine the effectiveness of our opaque scheme.
Furthermore, we provide a rule of thumb to find the threshold opaque scheme
parameters needed to achieve the maximum total cost savings for perishable
inventory systems. We hope that many retailers selling perishables (e.g., fresh
produce and baked goods) find the opaque scheme useful, implement it, and
contribute to the reduction of the food wastage.
