Multi-product inventory model for cold items with cost and emission consideration

Abstract

While sharing storage and transportation units is common for many product types, cold items usually have different temperature requirements and as a result, not all items can share a holding/transportation unit. Consequently, the type of products and their compatibility with other products needs to be considered in the inventory model. In this paper, we propose multi-product inventory models for cold items. The models determine the inventory levels that minimize either the cost or carbon-equivalent emissions. We model the compatibility of items as a constraint in the inventory model. To solve the model, we first find an appropriate “family of products” that can share a storage/transportation unit. Then, for each family of products we develop an approximate solution method to determine the order quantity of each product within a family. Numerical experiments demonstrate the solution procedure, and provide managerial insights into cold item inventory policies.