A deterministic order level inventory model for deteriorating items with two storage facilities under FIFO dispatching policy

Abstract

Generally, two warehousing inventory models adopt the last-in-first-out (LIFO) dispatch policy. According to this policy, the items that are stored last are used first. This approach might not appear appropriate in case of deteriorating goods. First-in-first-out (FIFO) dispatch policy aids in preserving the freshness of commodities that tend to deteriorate and is therefore, widely preferred for facilities that store them. Adoption of the FIFO policy yields fresh and good conditioned stock thereby resulting in customer satisfaction. Organisations that deal in perishable goods survive and thrive on this principle. In this paper, Sarma's (1987) LIFO model for 'deteriorating items with two storage facilities' has been revisited under FIFO dispatch policy. The two models have been compared using various parameters like holding costs and deterioration rates in both the warehouses and appropriate dispatch policy has been suggested. The results have been validated with the help of a numerical example. Sensitivity analysis has also been performed to study the impact of various parameters on the optimal solution.