A simple heuristic for perishable inventory control under non-stationary stochastic demand

A.G. Alcoba*, R. Rossi, B. Martin-Barragan, E.M.T. Hendrix

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

14 Citations (Scopus)

Abstract

In this paper, we study the single-item single-stocking location non-stationary stochastic lot sizing problem for a perishable product. We consider fixed and proportional ordering cost, holding cost and penalty cost. The item features a limited shelf life, therefore we also take into account a variable cost of disposal. We derive exact analytical expressions to determine the expected value of the inventory of different ages. We also discuss a good approximation for the case in which the shelf-life is limited. To tackle this problem, we introduce two new heuristics that extend Silver’s heuristic and compare them to an optimal Stochastic Dynamic Programming policy in the context of a numerical study. Our results demonstrate the effectiveness of our approach.
Original languageEnglish
Pages (from-to)1885-1897
JournalInternational Journal of Production Research
Volume55
Issue number7
DOIs
Publication statusPublished - 2017

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