Analysis of postponement strategy for perishable items by EOQ-based models

Analysis of postponement strategy for perishable items by EOQ-based models

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Article ID: iaor20082120
Country: Netherlands
Volume: 107
Issue: 1
Start Page Number: 31
End Page Number: 38
Publication Date: Jan 2007
Journal: International Journal of Production Economics
Authors: , ,
Keywords: supply & supply chains, retailing
Abstract:

This paper develops economic-order-quantity (EOQ)-based models with perishable items to evaluate the impact of a form of postponement strategy on the retailer in a supply chain. We formulate models for a postponement system and an independent system to minimize the total average cost function per unit time for ordering and keeping n perishable endproducts. An algorithm is given to derive the optimal solutions of the proposed models. The impact of the deterioration rate on the inventory replenishment policies is studied with the help of theoretical analysis and numerical examples. Our theoretical analysis and computational results show that a postponement strategy for perishable items can give a lower total average cost under certain circumstances.

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