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Allocation of a Perishable Product Inventory

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  • Gregory P. Prastacos

    (University of Pennsylvania, Philadelphia, Pennsylvania)

Abstract

A perishable product is periodically produced and allocated among n locations in a region. It is assumed that costs are charged for units short or outdated at any location, and the excess demand at any location is satisfied from outside sources. We prove that the optimal allocation policy minimizes both the expected average shortages and the expected average outdates in the region, and we discuss the management implications of this result. We present the myopically optimal policy M and show that it has similar properties to the optimal policy π*. We prove that π* cannot be “very different” from M ; we derive analytic bounds for the performance of π*, and show that the long-run performance of M lies always within these bounds. Finally, some computational results are presented.

Suggested Citation

  • Gregory P. Prastacos, 1981. "Allocation of a Perishable Product Inventory," Operations Research, INFORMS, vol. 29(1), pages 95-107, February.
    • Handle: RePEc:inm:oropre:v:29:y:1981:i:1:p:95-107
    DOI: 10.1287/opre.29.1.95
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    Cited by:

    1. Piramuthu, Selwyn & Zhou, Wei, 2013. "RFID and perishable inventory management with shelf-space and freshness dependent demand," International Journal of Production Economics, Elsevier, vol. 144(2), pages 635-640.
    2. Peter L. Jackson & John A. Muckstadt, 1989. "Risk pooling in a two‐period, two‐echelon inventory stocking and allocation problem," Naval Research Logistics (NRL), John Wiley & Sons, vol. 36(1), pages 1-26, February.
    3. Duan, Qinglin & Liao, T. Warren, 2014. "Optimization of blood supply chain with shortened shelf lives and ABO compatibility," International Journal of Production Economics, Elsevier, vol. 153(C), pages 113-129.
    4. Puranam, Kartikeya & Novak, David C. & Lucas, Marilyn T. & Fung, Mark, 2017. "Managing blood inventory with multiple independent sources of supply," European Journal of Operational Research, Elsevier, vol. 259(2), pages 500-511.
    5. Beliën, Jeroen & Forcé, Hein, 2012. "Supply chain management of blood products: A literature review," European Journal of Operational Research, Elsevier, vol. 217(1), pages 1-16.
    6. Neves-Moreira, Fábio & Almada-Lobo, Bernardo & Guimarães, Luís & Amorim, Pedro, 2022. "The multi-product inventory-routing problem with pickups and deliveries: Mitigating fluctuating demand via rolling horizon heuristics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    7. Padmanabhan, G. & Vrat, Prem, 1995. "EOQ models for perishable items under stock dependent selling rate," European Journal of Operational Research, Elsevier, vol. 86(2), pages 281-292, October.
    8. Anand Paul & Tharanga Rajapakshe & Suman Mallik, 2019. "Socially Optimal Contracting between a Regional Blood Bank and Hospitals," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 908-932, April.

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