Browsing by Subject "Perishable Inventory"

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Open Access
Age and lifetime based policies for perishable items
(2018-10) Poormoaied, Saeed
Many inventory systems hold items which perish after a specific time. Upon perishing, the inventory level falls down to zero which may incur irreparable costs to the system. Therefore, developing a genius control policy for managing such inventories is a crucial task. Since the lifetime of items are now affecting the inventory level, applying the traditional inventory policies which are based only on the stock level causes some shortcomings. The traditional inventory policies lack the information regarding the lifetime of items. On the other hand, the optimal policy for perishable items is known to be a periodic review policy keeping the complete information regarding the remaining lead times of orders, inventory onhand, and lifetimes of items. Optimal control policy class for continuous review is still an open question. In this regard, we attempt to contribute the remaining lifetime of items into the inventory policy for perishable items with positive lead time and fixed lifetime under a continuous review with a service level constraint. We develop a class of hybrid control policies which utilize the remaining lifetimes of items in addition to stock levels. We study a stochastic single item inventory system where demand follows a Poisson process and unmet demand is lost. The aging process of a new batch starts when it joins the inventories. We provide an exact analytic model by using an embedded Markov chain process to derive the stationary distribution of the effective lifetimes in the presence of both one and more than one outstanding orders assumptions. Operating characteristics of the system are derived using the renewal reward theorem. Additionally, we propose some control policies based on only the remaining lifetime of items. Our results reveal that the hybrid policies consistently outperform the stock level and remaining lifetime-based polices, especially when demand during the lifetime is sufficiently small and unit perishing cost is high. It is observed that the dominance relations among these two policy classes depend on the particular parameter setting. In particular, when the lifetime of items is long enough, the stock level based policy performs very well. Finally, we present our methodology for finding the optimal solution thorough a heuristic algorithm derived by considering the structure of the objective function and service level constraint, and a sensitivity analysis is performed to evaluate the impact of the key input parameters.
Open Access
A dynamic pricing policy for perishables with stochastic demand
(2001) Yıldırım, Gonca
III this study, we consider the pricing of perishables in an inventory system where items have a fixi'd lifetime. Unit demands come from a Poisson Process with a price-dependent rate. The instances at which an item is withdrawn from inventory due to demand constitute decision epochs for setting the sales price; the time elapsed between two such consecutive instances is called a period. The sales price at each decision epoch is taken to be a lunction of Tj denoting the remaining lifetime when tin' inventory level drops to z, i = 1,...,Q. The objective is to determine the optimal pricing policy (under the proposed class) and the optimal initial stocking level to maximize the discounted expected profit. A Dynamic Programming approach is used the solve the problem numerically. Using the backward recursion, the optimal price paths are determined for the discounted expected profit for various combinations of remaining lifetimes. Our numerical studies indicate that a single price policy results in significantly lower profits when compared with our formulation.