Managing Perishable Inventory

This article discusses inventory management of perishable items, including the differences between inventory models that consider items’ perishability and the standard models that ignore this issue. We hope that this article will help fostering the interest of students and researchers in inventory control of perishable items, and ultimately help improving the inventory control of perishable items in practice. To emphasize the importance of appropriately managing inventory of perishables, note that Ref. 1 estimates the total cost of unsalable merchandise of suppliers to drugstores and supermarkets in 2005 by $2.05 billion. This cost goes directly to the bottom line of many of these companies. Moreover, higher clock speed in many industries results in shorter and shorter life-cycles of many products. The inventory control of such products might become similar to the one of perishable items as well after some period, when a newer version is presented, the value of old items declines significantly. One important difference between items with short life-cycle and perishables is that in some cases, the firm controls the introduction of the new technology. Still, much of the insight derived for managing perishable inventory may be valid for products with short life cycles. Most of the traditional inventory models analyzed in the literature (e.g., EOQ, (Q, r), and (S, s) policies) assume an infinite shelflife for items (see Multiechelon Multiproduct InventoryManagement). (An exception