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

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.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 40 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.