An inventory model for perishable items with stock-dependent demand rate under mixed issuing policy

Abstract

In this paper, we investigate retailer's procurement policy of a perishable item that has stock-dependent demand rate. Stock-dependent demand rate implicitly implies that all items in inventory are displayed for sale. In this case, the retailer tends to display sales items such a way that FIFO policy can be enforced, while prudent customers search for freshest items, which results in LIFO policy. Considering the two conflicting aspects commonly observed in the real world, this study assumes that the items are sold by a mixed issuing policy, a weighted combination of LIFO and FIFO. For the system presented, mathematical models are developed with the objective of maximizing the retailer's profit. We examine the sensitivity of the decision variables to changes in the system parameters.