Issuing for perishable inventory management with a minimum inventory volume constraint

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. (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:

Modified EMQ model. (pg 281)

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).

Objective Function (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
First-in, First-Out Revenue Equation (10). (pg 284)

See Appendix B for the FIFO/LIFO for the remaining cases

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