A bi-objective optimization model for a retail inventory system with perishable products

• Main Authors: Ching, Phoebe Mae, Cruz, Dennis, Jose, John Anthony C., Bandala, Argel A., Vicerra, Ryan Rhay P., Dadios, Elmer Jose P.
• Format: text
• Published: Animo Repository 2019
• Subjects: Perishable goods—Inventories; First in, first out (Accounting); Inventories—Accounting; Programming (Mathematics); Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/58; https://animorepository.dlsu.edu.ph/context/faculty_research/article/1057/type/native/viewcontent
• Institution: De La Salle University

For perishable inventories, cost alone is not a sufficient performance indicator. Minimizing costs can yield scenarios where demand is serviced with older units to allow for less frequent orders and maximize the utility of available inventories. This is contrary to the customers' needs, as perishables may have a tendency to deteriorate over time. This study proposes a bi-objective model for managing perishables, with cost and freshness as the system objectives. The proposed model may be used to develop policies for ordering and issuance, which directly affect quality. These would allow for the purposeful movement of inventory units across the system. When the results of the single-objective and bi-objective models were run, it was found that a cost-centric model had a tendency to accumulate older inventory, which could be used to service periods with low demand. This allowed it to work within its capacity constraints while negating the need to order during periods with low demand. The introduction of a quality objective removed this tendency, resulting in fresher inventory and lower inventory levels on the average. The model serves as a base model for further studies, to determine how new policies and technology may be employed to achieve higher quality as well as minimal costs.