Inventory Lot-size Policies for Perishable Products Based on Advance Payments

Abstract

Abstract:

Suppliers of perishable products featured by seasonal demand usually require retailers to pay a certain percentage of the total purchase cost in advance as a deposit. Product's shelf life is a very important factor that retails will think when making purchase decision. In this paper, we mainly study the batch ordering policy for perishable products with shelf life. Besides, we also take both no shortage and partial backlog problem into consideration to conduct comparison. The mode of advance payment to supplier is applied in our research. After model settling, Inventory control strategies for perishable products are explored. Theoretical analysis and numerical results show that retailer's advance payment fraction and product shelf life have a significant impact on retailer's optimal ordering policy. Appropriate shortage is conducive to reducing the retailers' total cost. Finally, we provide relevant policy recommendations for real-world enterprises.

Key words: inventory controlling, advance payments, expiration dates, perishable products

Cao Yu, Li Yemei, Li Qingsong. Inventory Lot-size Policies for Perishable Products Based on Advance Payments[J]. , 2019, 31(4): 206-216.

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