Inventory optimization for perishables subject to supply disruptions

We study a retailer selling perishable products with fixed lifetime. The retailer’s supply system is subject to random disruptions. Assuming a base-stock policy, deterministic demand and stationary cost parameters, we determine the expression for the optimal base-stock level. We show that if the ret...

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Bibliographic Details
Published inOptimization letters Vol. 10; no. 1; pp. 89 - 108
Main Authors Atan, Zümbül, Rousseau, Martine
Format Journal Article
LanguageEnglish
Published Berlin/Heidelberg Springer Berlin Heidelberg 01.01.2016
Subjects
Computational Intelligence
Mathematics
Mathematics and Statistics
Numerical and Computational Physics
Operations Research/Decision Theory
Optimization
Original Paper
Simulation
Inventory mitigation strategy
Supply disruptions
Risk management
Perishable products
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Summary:We study a retailer selling perishable products with fixed lifetime. The retailer’s supply system is subject to random disruptions. Assuming a base-stock policy, deterministic demand and stationary cost parameters, we determine the expression for the optimal base-stock level. We show that if the retailer manages to make the system safer, it is possible to operate with the same expected cost even with products with shorter lifetimes. We conclude that the retailer should concentrate on reducing disruptions’ durations instead of their occurrence rate.
ISSN:1862-4472
1862-4480
DOI:10.1007/s11590-015-0858-7