A Joint Return Policy for a Multi-Item Perishable Inventory Model with Deterministic Demands, Return and All-Units Discount

Abstract

In this paper, we develop a multi-item perishable inventory model with deterministic demands, return and all-units discount. We consider a situation where a retailer sells several products to the customer and orders the products from one supplier. Demands are assumed to be deterministic following an inventory-dependent demand, and the supplier offers all-units discount to the retailer who has an opportunity to return unsold or deteriorated products to the supplier at a certain cost. In order to minimize the total cost for the retailer, the decision variables are the optimal return time and the optimal ordering quantity. Considering a multi-item case as an extension of the model by Setiawan et al. (2018) is the main contribution of this paper. We also develop an algorithm to find the optimal solution of the model. Numerical examples for three items are given to illustrate the model and a sensitivity analysis is performed to study the effect of the changes in parameter values on the optimal solution. We consider two scenarios, one with all-units discount and one with no discount. Within these two scenarios, we consider conditions of individual or joint return time for these three items. It is found that the individual return time with no discount gives the least total inventory cost in the numerical examples. Also, in general increasing the value of holding cost, deteriorating rate, return cost per unit and backorder cost will increase the total inventory cost in all scenarios.