Economic order quantity for perishables with decreasing willingness to purchase during their life cycle

Ronald David Suárez Díaz, Carlos D. Paternina-Arboleda, José Luis Martínez-Flores and Miguel A. Jimenez-Barros

Operations Research Perspectives, 2020, vol. 7, issue C

Abstract: In an inventory management model for perishables, depletion due to interacting with the demand is of importance, but also, damage to products is a relevant variable. This article considers that demand and sales phenomena do not always go hand-in-hand. The demand process relates to the willingness to acquire products in good condition, giving the customer the power to evaluate the quality of the product before an effective purchase takes place. We also considered the cost of disposing of unsold units, besides the conventional costs for storage and procurement. We then proposed a mathematical model to derive the Economic Order Quantity (EOQ) under specific conditions, in order to minimize the expected management cost of perishables, assuming constant demand and linearly decreasing purchase probability during the product life cycle. We proposed several random instances and validate the mathematical model using simulation. We then found the optimal parameters for the inventory policy using a third-order numerical approximation. Last, we developed a sensitivity analysis over the product life cycle to prove that the proposed model approximates to a traditional EOQ model for perishables when life cycle is sufficiently large.

Keywords: EOQ model; Perishables; Purchase Probability (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2214716019300570
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:oprepe:v:7:y:2020:i:c:s2214716019300570

DOI: 10.1016/j.orp.2020.100146

Access Statistics for this article

Operations Research Perspectives is currently edited by Rubén Ruiz Garcia

More articles in Operations Research Perspectives from Elsevier
Bibliographic data for series maintained by Catherine Liu ().