A review and reflection on inventory management of perishable products in a single-echelon model

Abstract

This paper reviews research on single-echelon inventory management of perishable products using the continuous review model. A steady progression of research in this area has included of a range of parameters and is reaching a saturation point where models appear effective and cover a range of realistic situations for single-echelon management. However, research has rested on the assumption that a total cost or profit metric should be used when answering the replenishment questions of when and how much to order. This total cost/profit metric is less appropriate when considering a holistic or systemic modelling of the company where the balance in measurements between departments and the continuous improvement are priority. From this perspective, we outline concerns with existing approaches using a total cost/profit metric when applied to a company. Instead of using approximation methods to optimise total costs/profits in a single department, we assert that managers should focus on multi-metric performance measures to improve system-wide results. In this paper, we present a method to compare the single-echelon replenishment model using multi-metric performance measures and those with the traditional total cost/profit metric.