Research on Ordering Strategy of Perishable Products with Variable Demand

Abstract

This paper mainly considers the influence of price on demand for perishable products. According to the characteristics of products and the condition of demand, demand is a function of price elasticity. Under the premise of allowing the shortage, this study constructs optimal inventory control model of perishable products by introducing the lost order coefficient and solves the model, improves the traditional inventory model. Using optimization method, which deduces the optimal ordering cycle, the optimal order quantity and the total inventory cost, etc. Through the example for the deterioration rate and service level to sensitivity analysis, the results show that as deterioration rate increases, the total inventory cost and sale price are on the rise, while the unit profit is decreasing; The service level is directly proportional to the selling price, inversely proportional to the total inventory cost and unit profit. This research provides a theoretical basis for firms in the efficient inventory management.