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A good approximation of the inventory level in a (Q, r) perishable inventory system

Published online by Cambridge University Press:  15 August 2002

Huan Neng Chiu
Huan Neng Chiu*
Affiliation:
Department of Industrial Management, National Taiwan University of Science and Technology, Taipei, Taiwan 106, Republic of China.
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Abstract

This paper derives a good approach to approximating the expected inventory level per unit time for the continuousreview (Q, r) perishable inventory system. Three existing approximation approaches are examined and compared with the proposed approach. Three stockout cases, including the full backorder, the partial backorder, and the full lost sales cases, which customers or material users generally use to respond to a stockout condition are considered.This study reveals the fact that the proposed approximationis simple yet good and suitable for incorporation into the (Q, r)perishable inventory model to determine the best ordering policy.The results from numerical examples and a sensitivity analysisindicate that severe underestimation or overestimation of the expected inventory level per unit time due to the use of an inappropriate approximation approach would result in great distortion in the determination of the best ordering policy.

Keywords

Perishable inventoryapproximationbackorderlost salessensitivity analysis.
Type
Research Article
Information
RAIRO - Operations Research , Volume 33 , Issue 1 , January 1999 , pp. 29 - 45
Copyright
© EDP Sciences, 1999

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