Two-warehouse inventory model with deterioration under FIFO dispatching policy

In most of the literatures on two-warehouse inventory decision models, the last-in-first-out (LIFO) dispatching policy has always been assumed. This presumption, however, is not in line with the actual practice of most business entities. To enhance the freshness of merchandise or goods, businesses commonly follow the first-in-first-out procedure (FIFO). This inconsistency forms the base and main motivation for our research. In this paper, Pakkala and Achary’s two-warehouse LIFO model is first modified and then a FIFO dispatching two-warehouse model with deterioration is proposed. Comparison of the two models indicated that the FIFO model is less expensive to operate than LIFO, if the mixed effects of deterioration and holding cost in RW are less than that of OW. Finally, numerical examples are provided to investigate and examine the impact that various parameters have on policy choice. 2005 Published by Elsevier B.V.