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

Ole Hansen, Sandra Transchel and Hanno Friedrich

European Journal of Operational Research, 2023, vol. 308, issue 2, 661-675

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.

Keywords: Inventory; Perishable products; Random lead time; Value of information (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:308:y:2023:i:2:p:661-675

DOI: 10.1016/j.ejor.2022.11.041

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