A periodic inventory system of intermittent demand items with fixed lifetimes

Abstract

Perishable items with a limited lifespan and intermittent/erratic consumption are found in a variety of industrial settings: dealing with such items is challenging for inventory managers. In this study, a periodic inventory control system is analysed, in which items are characterised by intermittent demand and known expiration dates. We propose a new inventory management method, considering both perishability and intermittency constraints. The new method is a modification of a method proposed in the literature, which uses a periodic order-up-to-level inventory policy and a compound Bernoulli demand. We derive the analytical expression of the fill rate and propose a computational procedure to calculate the optimal solution. A comparative numerical analysis is conducted to evaluate the performance of the proposed solution against the standard inventory control method, which does not take into account perishability. The proposed method leads to a bias that is only affected by demand size, in contrast to the standard method which is impacted by more severe biases driven by intermittence and periods before expiration.