Abstract
Perishable products require accurate inventory control models as their effect on operations management can be critical. This assumption is particularly relevant in highly uncertain and dynamic markets, as for the ones generated by the pandemic era. This paper presents an inventory control model for perishable items with a demand rate variable over time, and dependent on the inventory rate. The model also considers the potential for backlogging and lost sales. Imperfect product quality is included, and deterioration is modelled as a time-dependent variable. The framework envisages the possibility to define variables affected by uncertainty in terms of probability distribution functions, which are then jointly managed via a Monte Carlo simulation. This paper is intended to provide an analytical formulation to deal with uncertainty and time-dependent inventory functions to be used for a variety of perishable products. The formulation is designed to support decision-making for the identification of the optimal order quantity. A numerical example exemplifies the outcomes of the paper and provides a cost-based sensitivity analysis to understand the role of main parameters.
Highlights
The economic order quantity (EOQ) is an inventory control model largely accepted in industrial operations management, since its introduction in the earliest decades of the twentieth century [1]
This paper presents an integrated EOQ inventory control model for perishable products, subject to variable defectiveness checked during quality control and time-dependent deterioration, which can cause both backorder and lost sale
Minor effects are observable in lost sale costs (LsC), while negligible effects are presented in the other components of the cost function
Summary
The economic order quantity (EOQ) is an inventory control model largely accepted in industrial operations management, since its introduction in the earliest decades of the twentieth century [1]. One of the more investigated area refers to products that suffer of a short lifecycle This vast literature becomes relevant in current days for the identification of the control models to be adopted for sustainable inventory and production management. Deterioration may yield waste, which has to be disposed, generating not-negligible disposal cost On these assumptions, this paper contributes to the field of production engineering research by proposing a new model that can take into account costs related to perishable products, along with the uncertainty of demand and quality level, and the associated effect on customers, i.e. backordering or lost sales. Even though this document presents an integrated formulation for modelling the features of pandemic related items, the model has been built to provide an analytic formulation extensible to a large set of perishable products (e.g. pharmaceutical, food and beverages). The conclusions summarize the outcome of this work and the potential for future research
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