Simple Policies with Provable Bounds for Managing Perishable Inventory

Zhang, Hailun; Zhang, Jiheng; Zhang, Rachel Q.

doi:10.1111/poms.13244

Cited by 17 publications

(15 citation statements)

References 25 publications

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“…Under compound Poisson demand, as the arrival rate approaches infinity, both the heuristic and the optimal policies converge to a policy that orders up to the mean demand in each period. Similar asymptotic results have appeared in Zhang et al (2020) and Gallego and van Ryzin (1994).…”

Section: A Heuristic Policy and Its Theoretical Boundssupporting

confidence: 84%

Separation of Perishable Inventories in Offline Retailing Through Transshipment

2022

Operations Research

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Transshipment in retailing is a practice where one outlet ships its excess inventory to another outlet with inventory shortages. By balancing inventories, transshipment can reduce waste and increase fill rate at the same time. In “Separation of Perishable Inventories in Offline Retailing Through Transshipment,” Li, Yu, and Du explore the idea of transshipping perishable goods with a fixed finite lifetime in offline grocery retailing. In the offline retailing of perishable goods, customers typically choose the newest items first, which can lead to substantial waste. They show that, in this context, transshipment plays two roles. One is inventory balancing, which is well known in the literature. The other is inventory separation, which is new to the literature. That is, transshipment allows a retailer to put newer inventory in one outlet and older inventory in the other. This makes it easier to sell older inventory and reduces waste as a result.

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Section: A Heuristic Policy and Its Theoretical Boundssupporting

confidence: 84%

Separation of Perishable Inventories in Offline Retailing Through Transshipment

2022

Operations Research

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“…We are not aware of any literature studying perishable inventory systems under a general issuance policy. As mentioned before, Zhang et al (2020) analyze theoretical performances of two heuristic base-stock policies for perishable inventory systems. Different from this paper, they focus on finite-horizon and discounted-profit systems under i.i.d.…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, there is little theory on the near-optimality of base-stock policies for the classic perishable inventory system. To our best knowledge, Zhang et al (2020) is the only study that analyzes theoretical performances of base-stock policies for perishable inventory systems. Under a discounted profit criterion, they focus on two heuristic base-stock policies which ignore perishability and analyze their asymptotic properties when the market size is large.…”

Section: Introductionmentioning

confidence: 99%

Asymptotic Optimality of Base-Stock Policies for Perishable Inventory Systems

Gong

Chao

2023

Management Science

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We consider periodic review perishable inventory systems with a fixed product lifetime. Unsatisfied demand can be either lost or backlogged. The objective is to minimize the long-run average holding, penalty, and outdating cost. The optimal policy for these systems is notoriously complex and computationally intractable because of the curse of dimensionality. Hence, various heuristic replenishment policies are proposed in the literature, including the base-stock policy, which raises the total inventory level to a constant in each review period. Whereas various studies show near-optimal numerical performances of base-stock policies in the classic system with zero replenishment lead time and a first-in-first-out issuance policy, the results on their theoretical performances are very limited. In this paper, we first focus on this classic system and show that a simple base-stock policy is asymptotically optimal when any one of the product lifetime, demand population size, unit penalty cost, and unit outdating cost becomes large; moreover, its optimality gap converges to zero exponentially fast in the first two parameters. We then study two important extensions. For a system under a last-in-first-out or even an arbitrary issuance policy, we prove that a simple base-stock policy is asymptotically optimal with large product lifetime, large unit penalty costs, and large unit outdating costs, and for a backlogging system with positive lead times, we prove that our results continue to hold with large product lifetime, large demand population sizes, and large unit outdating costs. Finally, we provide a numerical study to demonstrate the performances of base-stock policies in these systems. This paper was accepted by Victor Martinez de Albéniz, operations management.

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“…This often involves a divergent production process that typically only has a few raw materials that are transformed into a wide variety of products (Dennis and Meredith, 2000). In process industries, the raw materials are often perishable which has implications for inventory and production planning (Nahmias, 1982;Zhang et al, 2020). In addition, there is often a point at which the production system changes from batch/continuous to discrete production (Van Donk, 2001;Pool et al, 2011).…”

Section: Capability Definition Practicesmentioning

confidence: 99%

The effect of production system characteristics on resilience capabilities: a multiple case study

Dittfeld

Donk

Huet

2022

IJOPM

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PurposeTo date, the literature has usually assumed that a universal approach to resilience is appropriate in which different resilience capabilities are equally important for all organizations independent of contextual characteristics. In contrast this study investigates if production process characteristics affect resilience capabilities in terms of redundancy, flexibility, agility and collaboration.Design/methodology/approachAn in-depth exploratory multiple case study was carried out in eight companies across different industries. Data were gathered through multiple interviews with key informants in each company.FindingsThe authors find differences in, and trade-offs between, resilience capabilities and practices related to redundancy, agility and collaboration induced by the different configurations of production system characteristics: especially between discrete and process industries. Further, a major influential characteristic is the production strategy employed (make-to-stock or make-to-order) which stresses or limits collaboration and redundancy.Originality/valueThis is one of the first studies to explore the effects of production system characteristics as a major contingency factor on the resilience capabilities of an organization. As such it provides valuable insights into the development of a more nuanced contingency approach to how organizations can build resilience and employ specific practices that fit their situation.

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Simple Policies with Provable Bounds for Managing Perishable Inventory

Cited by 17 publications

References 25 publications

Separation of Perishable Inventories in Offline Retailing Through Transshipment

Separation of Perishable Inventories in Offline Retailing Through Transshipment

Asymptotic Optimality of Base-Stock Policies for Perishable Inventory Systems

The effect of production system characteristics on resilience capabilities: a multiple case study

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