Ordering Policies for Perishable Items with Unknown Shelf Life⁄Variable Supply Distribution

Abstract

Many inventory problems of practical significance deal with perishable commodities and uncertainty in the amount received against order under conditions of relative scarcity. In addition the statistical profile of such uncertainties in supply or shelf life may not be completely known. For perishable items, we incorporate these departures from the standard inventory model to allow for variable supply or random shelf life, having NBUE distributions with given mean but which are otherwise unknown. The NBUE hypothesis, which is a nonparametric specification only, is invoked as a description of the relative scarcity of supply and deterioration in quality of aging items. Minimax inventory policies under these assumptions are developed. The relationship of our findings to the earlier results of Silver and Panda, stability properties of the minimax solution as the shelf life increases and an approach when both supply and shelf life are random are indicated.