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.
Alcoba, A. G., Rossi, R., Martin-Barragan, B., & Hendrix, E. M. T. (2017). A simple heuristic for perishable inventory control under non-stationary stochastic demand. International Journal of Production Research, 55(7), 1885-1897. https://doi.org/10.1080/00207543.2016.1193248