Article ID: | iaor1998139 |
Country: | Netherlands |
Volume: | 75 |
Issue: | 2 |
Start Page Number: | 287 |
End Page Number: | 295 |
Publication Date: | Jun 1994 |
Journal: | European Journal of Operational Research |
Authors: | Silver Edward A., Jain Karuna |
Keywords: | programming: dynamic |
The paper presents a stochastic dynamic programming model for determining the optimal ordering policy for a perishable or potentially obsolete product so as to satisfy known time-varying demand over a specified planning horizon. We have considered random left time perishability where, at the end of each discrete period, the total remaining inventory either becomes worthless or remains usable for at least the next period. Two approximate solution methods are shown. The optimal and heuristic methods are compared on a large set of test problems and their performance as a function of various problem parameters is analyzed.