Two-echelon Inventory System with Perishable- on-the-Shelf Items

This paper deals with an inventory system with one central warehouse and a number of identical retailers. We consider perishable-on-theshelf items; that is, all items have a fixed shelf life and start to age on their arrival at the retailers. Each retailer faces Poisson demand and employs (1, T) inventory policy. Although demand not met at a retailer is lost, the unsatisfied demand at the central warehouse is backordered. In this study, the long-run system total cost rate is derived. Moreover, a proposition is proved to define a domain for the optimal solution. Also, a search algorithm is presented to obtain this solution. Further, we extend the existent paper of the well-known (S-1, S) policy to cope with our considered model. Finally, in a numerical study, we compare (1, T) policy with (S-1, S) policy in terms of system total cost. The results reveal that when transportation time from the central warehouse to the retailers is long, the (1, T) policy outperforms the (S-1, S) policy.