Multi-stage onboard inventory management policies for food and beverage items in cruise liner operations

We examine optimal policies for multi-stage replenishment of an onboard food and beverage (F&B) item for a cruise liner. Typically, in cruise liner operations, F&B items are ordered from suppliers before the final number of bookings is realized so as to take advantage of price discounts due to advanced contracting. Later, based on the realized headcount, F&B consumption distribution is updated, and subsequently, additional purchases can be made from local spot markets at the origin just prior to the departure and/or at an intermediate stop during the voyage. We investigate and identify optimal contracting and inventory replenishment policies that incorporate contracted and expedited purchasing schemes. We show that while optimal stock market replenishments follow base stock policies, optimal contracting decision can be derived from a piecewise cost function. We discuss insights from our results and propose future research opportunities for similar settings with multiple replenishment instants.