Abstract
Food retail inventory management faces major challenges by uncertain demand, perishability, and high customer service level requirements. In this paper, we present a method to determine dynamic order quantities for perishable products with limited shelf-life, positive lead time, FIFO or LIFO issuing policy, and multiple service level constraints. In a numerical study, we illustrate the superiority of the proposed method over commonly suggested order-up-to-policies. We show that a constant-order policy might provide good results under stationary demand, short shelf-life, and LIFO inventory depletion.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bao J, Lee C, Lee LH (2007) The value of electronic marketplace in a perishable product inventory system with auto-correlated demand. OR Spectrum 29: 627–641
Brodheim E, Derman C, Prastacos GP (1975) On the evaluation of a class of inventory policies for perishable products such as blood. Manag Sci 22: 1320–1325
Broekmeulen RACM, van Donselaar KH (2009) A heuristic to manage perishable inventory with batch ordering, positive lead-times, and time-varying demand. Comput Oper Res 36: 3013–3018
Chen J, Lin DKJ, Thomas DJ (2003) On the single item fill rate for a finite horizon. Oper Res Lett 31: 119–123
Cohen MA (1976) Analysis of single critical number policies in perishable inventory theory. Oper Res 24: 726–741
Dawson J (2004) Food retailing, wholesaling and catering. In: Bourlakis MA, Weightman PWH (eds) Food supply chain management. Blackwell, Oxford, pp 116–135
Diks EB, de Kok AG, Lagodimos AG (1996) Multi echelon systems: a service measure perspective. Eur J Oper Res 95: 241–263
Fries B (1975) Optimal ordering policy for a perishable commodity with fixed lifetime. Oper Res 23(1): 46–61
Goyal SK, Giri BC (2001) Recent trends in modeling of deteriorating inventory. Eur J Oper Res 134(1): 1–16
Grocery Manufacturer Association (2008) 2008 Joint industry unsaleables report: the real causes and actionable solutions. http://www.gmabrands.com/publications/UnsaleablesFINAL091108.pdf
Gruen TW, Corsten D, Bharadwaj S (2002) Retail out of stocks: a worldwide examination of extent, causes and consumer responses. Grocery Manufacturers of America, Washington, D.C.
Ishii H (1993) Perishable inventory problem with two types of customers and different selling prices. J Oper Res Soc Jpn 36(4): 199–205
Kapalka BA, Katircioglu K, Puterman ML (1999) Retail inventory control with lost sales, service constraints, and fractional lead times. Prod Oper Manag 8(4): 393–408
Karaesmen I, Scheller-Wolf A, Deniz B (2008) Managing perishable and aging inventories: review and future research directions. In: Kempf K, Keskinocak P, Uzsoy R (eds) Handbook of production planning. Kluwer international series in operations research and management science. Kluwer, Dordrecht
Law AM, Kelton WD (2000) Simulation modeling and analysis, 3rd edn. McGraw-Hill, New York
Lütke Entrup M (2005) Advanced planning for fresh food industries—integrating shelf-life into production planning. Physica, Heidelberg
Nahmias S (1982) Perishable inventory theory: a review. Oper Res 30: 680–708
Nahmias S, Pierskalla W (1973) Optimal ordering policies for a product that perishes in two periods subject to stochastic demand. Nav Res Logist Q 20(2): 207–229
Nahmias S (1994) Demand estimation in lost sales inventory systems. Nav Res Logist 41(6): 739–757
Pierskalla WP, Roach C (1975) Optimal issuing policies for perishable inventory. Manag Sci 18(11): 603–614
Rafaat F (1991) Survey of literature on continuously deteriorating inventory models. J Oper Res Soc 42(1): 27–37
Smith SA, Agrawal N (2000) Management of multi-item inventory systems with demand substitution. Oper Res 48(1): 50–64
Silver EA, Pyke DF, Peterson R (1998) Inventory management and production planning and scheduling, 3rd edn. Wiley, New York
van der Vorst JGAJ, Beulens AJM, van Beek P (2000) Modelling and simulating multi-echelon food systems. Eur J Oper Res 122: 354–366
van Donselaar KH, de Kok AG, Rutten WGMM (1996) Two replenishment strategies for the lost sales inventory model: a comparison. Int J Prod Econ 46–47(1): 285–295
van Donselaar KH, van Woensel T, Broekmeulen R, Fransoo J (2006) Inventory control of perishables in supermarkets. Int J Prod Econ 104(2): 462–472
van Houtum GJ, Zijm WHM (2000) On the relationship between cost and service models for general inventory systems. Stat Neerl 54(2): 127–147
van Zyl G (1964) Inventory control for perishable commodities. Ph.D. thesis, University of North Carolina, Chapel Hill, NC
Williams CL, Patuwo BE (1999) A perishable inventory model with positive order lead times. Eur J Oper Res 116(2): 352–373
Williams CL, Patuwo BE (2004) Analysis of the effect of various unit costs on the optimal incoming quantity in a perishable inventory model. Eur J Oper Res 156(1): 140–147
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Minner, S., Transchel, S. Periodic review inventory-control for perishable products under service-level constraints. OR Spectrum 32, 979–996 (2010). https://doi.org/10.1007/s00291-010-0196-1
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00291-010-0196-1