Models for a family of products with shelf life, and production and shortage costs in emerging markets

Many industrial products have very short life cycles as well as shelf-life constraints. Shelf-life does not necessarily reflect the physical condition of a product, it may reflect the productive or marketable life of a product as well in a competitive emerging market. In this paper, a production system that produces a family of items is considered and its policy is to produce all the items in every production cycle. A model is developed to incorporate the effects of constituent costs such as production cost, holding cost, setup cost, and shortage cost, which are four major costs, in a typical inventory system with a shelf-life constraint. By using this model, a proper decision is reached to choose one of the three options: reduction of production rate, reduction of cycle time to avoid the violation of shelf-life constraint and adjusting to both of them simultaneously. An example is framed out to illustrate the mechanism of the models and comparison between the proposed models with two previous models is also presented.