Shen, Z., et al. “Perishable Inventory Management System with a Minimum Volume Constraint.” Journal of the Operational Research Society, vol. 62, no. 12, Dec. 2011, pp. 2063–82. DOI.org (Crossref), doi:10.1057/jors.2010.181.
EMQ– Economic Manufacturing Quantity (pg 280)
The objective “is to maximize the profit by optimizing the ordering and issuing policies while satisfy- ing the minimum inventory requirement for this modified EMQ model.” (pg 280)
Modified EMQ Model for a perishable product that depreciates linearly with age:
The minimum inventory (I_min) is always maintained. After each inventory turnover, the I_min stock from the previous period is used/disposed and a new I_min stock is produced (pg 282).
- x_it: initial age of item i when it enters the primary market
- y_jt: initial age of item j when it enters secondary market
- z and w are binary variables that equal 1 only if x=1 and y=1, respectively. Else 0.
- D is the demand rate
- P is the production rate
- T_inv is the inventory turnover cycle length
- T_s is the inventory shelf life
- T is is regular production cycle length
- a is full primary market price
- b is full secondary market price
- N is the number of whole production cycles in T_inv
See Appendix B for the FIFO/LIFO for the remaining cases