Abstract
This paper deals with the problem of determining a best order-up-to-level and review interval policy for a fixed-life perishable product under the assumption that the lead time is positive. After the analysis of the behavioral pattern of the perishability process, a simple yet good approximation to the expected outdating is developed. Two extended bounds on the expected outdating and the total expected costs of holding inventory, ordering, backlogging unsatisfied demand, and disposing of perished inventory are derived to construct a heuristic ( R, T) model. Validation tests for both unrestricted and restricted cases are performed to assess the effectiveness of the approximate outdating. The performance of the heuristic model is tested empirically by comparing it with results from a simulation. Computational studies reveal that the approximate outdating and the heuristic model are accurate. The general results of a comparison between the heuristic model and no outdating model are also provided in this paper.
Published Version
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