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A simple heuristic for perishable item inventory control under non-stationary stochastic demand

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Listed:
  • Alejandro Gutierrez-Alcoba
  • Roberto Rossi
  • Belen Martin-Barragan
  • Eligius M.T. Hendrix

Abstract

In this paper, we study the single-item single-stocking location non-stationary stochastic lot sizing problem for a perishable product. We consider fixed and proportional ordering cost, holding cost and penalty cost. The item features a limited shelf life, therefore we also take into account a variable cost of disposal. We derive exact analytical expressions to determine the expected value of the inventory of different ages. We also discuss a good approximation for the case in which the shelf-life is limited. To tackle this problem, we introduce two new heuristics that extend Silver’s heuristic and compare them to an optimal Stochastic Dynamic Programming policy in the context of a numerical study. Our results demonstrate the effectiveness of our approach.

Suggested Citation

  • Alejandro Gutierrez-Alcoba & Roberto Rossi & Belen Martin-Barragan & Eligius M.T. Hendrix, 2017. "A simple heuristic for perishable item inventory control under non-stationary stochastic demand," International Journal of Production Research, Taylor & Francis Journals, vol. 55(7), pages 1885-1897, April.
  • Handle: RePEc:taf:tprsxx:v:55:y:2017:i:7:p:1885-1897
    DOI: 10.1080/00207543.2016.1193248
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    Cited by:

    1. Marcio Costa Santos & Agostinho Agra & Michael Poss, 2020. "Robust inventory theory with perishable products," Annals of Operations Research, Springer, vol. 289(2), pages 473-494, June.
    2. Visentin, Andrea & Prestwich, Steven & Rossi, Roberto & Tarim, S. Armagan, 2021. "Computing optimal (R,s,S) policy parameters by a hybrid of branch-and-bound and stochastic dynamic programming," European Journal of Operational Research, Elsevier, vol. 294(1), pages 91-99.
    3. Rossi, Roberto & Tomasella, Maurizio & Martin-Barragan, Belen & Embley, Tim & Walsh, Christopher & Langston, Matthew, 2019. "The Dynamic Bowser Routing Problem," European Journal of Operational Research, Elsevier, vol. 275(1), pages 108-126.

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