IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v308y2023i2p661-675.html
   My bibliography  Save this article

Replenishment strategies for lost sales inventory systems of perishables under demand and lead time uncertainty

Author

Listed:
  • Hansen, Ole
  • Transchel, Sandra
  • Friedrich, Hanno

Abstract

We develop an inventory control policy for perishable products considering both random demand and random lead time. We consider a B2C retail environment where excess demand is lost. The policy dynamically determines the optimal replenishment quantity under a service level constraint in every period, allowing for order-crossing, a widely disregarded characteristic in the literature. Regarding perishability, we compare the two most extreme issuing policies, first-expired-first-out (FEFO) and last-expired-first-out (LEFO), and evaluate our policy to existing inventory policies for perishables that typically ignore lead time uncertainty.

Suggested Citation

  • Hansen, Ole & Transchel, Sandra & Friedrich, Hanno, 2023. "Replenishment strategies for lost sales inventory systems of perishables under demand and lead time uncertainty," European Journal of Operational Research, Elsevier, vol. 308(2), pages 661-675.
    • Handle: RePEc:eee:ejores:v:308:y:2023:i:2:p:661-675
    DOI: 10.1016/j.ejor.2022.11.041
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221722008980
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2022.11.041?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liu, Liming & Yang, Tao, 1999. "An (s,[punctuation space]S) random lifetime inventory model with a positive lead time," European Journal of Operational Research, Elsevier, vol. 113(1), pages 52-63, February.
    2. Mansour Rached & Zied Bahroun & Jean-Pierre Campagne, 2016. "Decentralised decision-making with information sharing vs. centralised decision-making in supply chains," International Journal of Production Research, Taylor & Francis Journals, vol. 54(24), pages 7274-7295, December.
    3. Robert S. Kaplan, 1970. "A Dynamic Inventory Model with Stochastic Lead Times," Management Science, INFORMS, vol. 16(7), pages 491-507, March.
    4. Morris A. Cohen, 1976. "Analysis of Single Critical Number Ordering Policies for Perishable Inventories," Operations Research, INFORMS, vol. 24(4), pages 726-741, August.
    5. Itir Z. Karaesmen & Alan Scheller–Wolf & Borga Deniz, 2011. "Managing Perishable and Aging Inventories: Review and Future Research Directions," International Series in Operations Research & Management Science, in: Karl G. Kempf & Pınar Keskinocak & Reha Uzsoy (ed.), Planning Production and Inventories in the Extended Enterprise, chapter 0, pages 393-436, Springer.
    6. Adachi, Yasuo & Nose, Toyokazu & Kuriyama, Sennosuke, 1999. "Optimal inventory control policy subject to different selling prices of perishable commodities," International Journal of Production Economics, Elsevier, vol. 60(1), pages 389-394, April.
    7. Ketzenberg, Michael E. & Rosenzweig, Eve D. & Marucheck, Ann E. & Metters, Richard D., 2007. "A framework for the value of information in inventory replenishment," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1230-1250, November.
    8. Haijema, René, 2013. "A new class of stock-level dependent ordering policies for perishables with a short maximum shelf life," International Journal of Production Economics, Elsevier, vol. 143(2), pages 434-439.
    9. Emre Berk & Ülkü Gürler, 2008. "Analysis of the ( Q , r ) Inventory Model for Perishables with Positive Lead Times and Lost Sales," Operations Research, INFORMS, vol. 56(5), pages 1238-1246, October.
    10. Williams, Craig L. & Patuwo, B. Eddy, 1999. "A perishable inventory model with positive order lead times," European Journal of Operational Research, Elsevier, vol. 116(2), pages 352-373, July.
    11. S. Kalpakam & K. P. Sapna, 1996. "A lost sales (S — 1, S) perishable inventory system with renewal demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 43(1), pages 129-142, February.
    12. Jing-Sheng Song & Paul H. Zipkin, 1996. "Inventory Control with Information About Supply Conditions," Management Science, INFORMS, vol. 42(10), pages 1409-1419, October.
    13. Williams, Craig L. & Eddy Patuwo, B., 2004. "Analysis of the effect of various unit costs on the optimal incoming quantity in a perishable inventory model," European Journal of Operational Research, Elsevier, vol. 156(1), pages 140-147, July.
    14. Ishii, Hiroaki & Nose, Toyokazu & Shiode, Shgo & Nishida, Toshio, 1981. "Perishable inventory management subject to stochastic leadtime," European Journal of Operational Research, Elsevier, vol. 8(1), pages 76-85, September.
    15. Haijema, René & Minner, Stefan, 2019. "Improved ordering of perishables: The value of stock-age information," International Journal of Production Economics, Elsevier, vol. 209(C), pages 316-324.
    16. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    17. Michael Ketzenberg & Jacqueline Bloemhof & Gary Gaukler, 2015. "Managing Perishables with Time and Temperature History," Production and Operations Management, Production and Operations Management Society, vol. 24(1), pages 54-70, January.
    18. Haijema, René & Minner, Stefan, 2016. "Stock-level dependent ordering of perishables: A comparison of hybrid base-stock and constant order policies," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 215-225.
    19. Chen, Frank Y. & Krass, Dmitry, 2001. "Inventory models with minimal service level constraints," European Journal of Operational Research, Elsevier, vol. 134(1), pages 120-140, October.
    20. Ravichandran, N., 1995. "Stochastic analysis of a continuous review perishable inventory system with positive lead time and Poisson demand," European Journal of Operational Research, Elsevier, vol. 84(2), pages 444-457, July.
    21. James R. Bradley & Lawrence W. Robinson, 2005. "Improved Base-Stock Approximations for Independent Stochastic Lead Times with Order Crossover," Manufacturing & Service Operations Management, INFORMS, vol. 7(4), pages 319-329, November.
    22. Brant E. Fries, 1975. "Optimal Ordering Policy for a Perishable Commodity with Fixed Lifetime," Operations Research, INFORMS, vol. 23(1), pages 46-61, February.
    23. Disney, Stephen M. & Maltz, Arnold & Wang, Xun & Warburton, Roger D.H., 2016. "Inventory management for stochastic lead times with order crossovers," European Journal of Operational Research, Elsevier, vol. 248(2), pages 473-486.
    24. Bendre, Abhijit Bhagwan & Nielsen, Lars Relund, 2013. "Inventory control in a lost-sales setting with information about supply lead times," International Journal of Production Economics, Elsevier, vol. 142(2), pages 324-331.
    25. David Zalkind, 1978. "Order-Level Inventory Systems with Independent Stochastic Leadtimes," Management Science, INFORMS, vol. 24(13), pages 1384-1392, September.
    26. Lawrence W. Robinson & James R. Bradley, 2008. "Note--Further Improvements on Base-Stock Approximations for Independent Stochastic Lead Times with Order Crossover," Manufacturing & Service Operations Management, INFORMS, vol. 10(2), pages 325-327, December.
    27. Nose, Toyokazu & Ishii, Hiroaki & Nishida, Toshio, 1984. "Perishable inventory management with stochastic leadtime and different selling prices," European Journal of Operational Research, Elsevier, vol. 18(3), pages 322-338, December.
    28. van Donselaar, K. & van Woensel, T. & Broekmeulen, R. & Fransoo, J., 2006. "Inventory control of perishables in supermarkets," International Journal of Production Economics, Elsevier, vol. 104(2), pages 462-472, December.
    29. Riezebos, Jan, 2006. "Inventory order crossovers," International Journal of Production Economics, Elsevier, vol. 104(2), pages 666-675, December.
    30. Richard Ehrhardt, 1984. "( s , S ) Policies for a Dynamic Inventory Model with Stochastic Lead Times," Operations Research, INFORMS, vol. 32(1), pages 121-132, February.
    31. Hayya, Jack C. & Harrison, Terry P. & He, X. James, 2011. "The impact of stochastic lead time reduction on inventory cost under order crossover," European Journal of Operational Research, Elsevier, vol. 211(2), pages 274-281, June.
    32. Riezebos, Jan & Zhu, Stuart X., 2020. "Inventory control with seasonality of lead times," Omega, Elsevier, vol. 92(C).
    33. Yu, Min & Nagurney, Anna, 2013. "Competitive food supply chain networks with application to fresh produce," European Journal of Operational Research, Elsevier, vol. 224(2), pages 273-282.
    34. Mark Ferguson & Michael E. Ketzenberg, 2006. "Information Sharing to Improve Retail Product Freshness of Perishables," Production and Operations Management, Production and Operations Management Society, vol. 15(1), pages 57-73, March.
    35. Fangruo Chen & Bin Yu, 2005. "Quantifying the Value of Leadtime Information in a Single-Location Inventory System," Manufacturing & Service Operations Management, INFORMS, vol. 7(2), pages 144-151, December.
    36. Bakker, Monique & Riezebos, Jan & Teunter, Ruud H., 2012. "Review of inventory systems with deterioration since 2001," European Journal of Operational Research, Elsevier, vol. 221(2), pages 275-284.
    37. Lawrence W. Robinson & James R. Bradley & L. Joseph Thomas, 2001. "Consequences of Order Crossover Under Order-Up-To Inventory Policies," Manufacturing & Service Operations Management, INFORMS, vol. 3(3), pages 175-188, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ben-Ammar, Oussama & Bettayeb, Belgacem & Dolgui, Alexandre, 2019. "Optimization of multi-period supply planning under stochastic lead times and a dynamic demand," International Journal of Production Economics, Elsevier, vol. 218(C), pages 106-117.
    2. Chatfield, Dean C. & Pritchard, Alan M., 2018. "Crossover aware base stock decisions for service-driven systems," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 312-330.
    3. Alp Muharremoglu & Nan Yang, 2010. "Inventory Management with an Exogenous Supply Process," Operations Research, INFORMS, vol. 58(1), pages 111-129, February.
    4. Hellemans, Tim & Boute, Robert N. & Van Houdt, Benny, 2019. "Analysis of lead time correlation under a base-stock policy," European Journal of Operational Research, Elsevier, vol. 276(2), pages 519-535.
    5. Thomas Wensing & Heinrich Kuhn, 2015. "Analysis of production and inventory systems when orders may cross over," Annals of Operations Research, Springer, vol. 231(1), pages 265-281, August.
    6. Hayya, Jack C. & Bagchi, Uttarayan & Kim, Jeon G. & Sun, Daewon, 2008. "On static stochastic order crossover," International Journal of Production Economics, Elsevier, vol. 114(1), pages 404-413, July.
    7. Kouki, Chaaben & Babai, M. Zied & Minner, Stefan, 2018. "On the benefit of dual-sourcing in managing perishable inventory," International Journal of Production Economics, Elsevier, vol. 204(C), pages 1-17.
    8. Jake Clarkson & Michael A. Voelkel & Anna‐Lena Sachs & Ulrich W. Thonemann, 2023. "The periodic review model with independent age‐dependent lifetimes," Production and Operations Management, Production and Operations Management Society, vol. 32(3), pages 813-828, March.
    9. Disney, Stephen M. & Maltz, Arnold & Wang, Xun & Warburton, Roger D.H., 2016. "Inventory management for stochastic lead times with order crossovers," European Journal of Operational Research, Elsevier, vol. 248(2), pages 473-486.
    10. Wang, Xun & Disney, Stephen M., 2017. "Mitigating variance amplification under stochastic lead-time: The proportional control approach," European Journal of Operational Research, Elsevier, vol. 256(1), pages 151-162.
    11. Kouki, Chaaben & Jouini, Oualid, 2015. "On the effect of lifetime variability on the performance of inventory systems," International Journal of Production Economics, Elsevier, vol. 167(C), pages 23-34.
    12. Ketzenberg, Michael & Oliva, Rogelio & Wang, Yimin & Webster, Scott, 2023. "Retailer inventory data sharing in a fresh product supply chain," European Journal of Operational Research, Elsevier, vol. 307(2), pages 680-693.
    13. Haijema, René & Minner, Stefan, 2019. "Improved ordering of perishables: The value of stock-age information," International Journal of Production Economics, Elsevier, vol. 209(C), pages 316-324.
    14. Kouki, Chaaben & Legros, Benjamin & Zied Babai, M. & Jouini, Oualid, 2020. "Analysis of base-stock perishable inventory systems with general lifetime and lead-time," European Journal of Operational Research, Elsevier, vol. 287(3), pages 901-915.
    15. Hayya, Jack C. & Harrison, Terry P. & He, X. James, 2011. "The impact of stochastic lead time reduction on inventory cost under order crossover," European Journal of Operational Research, Elsevier, vol. 211(2), pages 274-281, June.
    16. Janssen, Larissa & Diabat, Ali & Sauer, Jürgen & Herrmann, Frank, 2018. "A stochastic micro-periodic age-based inventory replenishment policy for perishable goods," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 118(C), pages 445-465.
    17. Xiuli Chao & Xiting Gong & Cong Shi & Chaolin Yang & Huanan Zhang & Sean X. Zhou, 2018. "Approximation Algorithms for Capacitated Perishable Inventory Systems with Positive Lead Times," Management Science, INFORMS, vol. 64(11), pages 5038-5061, November.
    18. Riezebos, Jan & Zhu, Stuart X., 2020. "Inventory control with seasonality of lead times," Omega, Elsevier, vol. 92(C).
    19. De Moor, Bram J. & Gijsbrechts, Joren & Boute, Robert N., 2022. "Reward shaping to improve the performance of deep reinforcement learning in perishable inventory management," European Journal of Operational Research, Elsevier, vol. 301(2), pages 535-545.
    20. Bryan, Nana & Srinivasan, Mandyam M., 2014. "Real-time order tracking for supply systems with multiple transportation stages," European Journal of Operational Research, Elsevier, vol. 236(2), pages 548-560.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:308:y:2023:i:2:p:661-675. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.