Modelling two-echelon serial inventory systems with perishable items

This paper deals with a continuous review, two-echelon serial (two locations) inventory system with perishable items. Transportation times and the lifetime of items are fixed. When the age of an item has reached its lifetime, the item is useless and consequently discarded from the system. The downstream location faces Poisson demand, and demand that cannot be met immediately is backordered. In this paper, we develop an efficient approximate technique for evaluation of (S – 1, S) policies. In a simulation study, we evaluate the quality of our approximation. The results reveal that our approximate technique works well in most cases.