Inventory management of perishable products: a time decay linked logistic approach

Abstract

This paper proposes a logistic-based approach to a class of inventory problems with shortages and time decay functions. Time decay and shortages are a common phenomena in products with short life cycles, and financial volatility necessitates more accurate characterisation of inventory costs based on time-adjusted value. In this paper an extended approach of Wagner–Whitin (WW) is used to determine lot sizes, replenishment cycle, and schedules. A sensitivity analysis of the proposed optimisation procedure has been conducted to justify its advantages.