Analysis of postponement strategy for perishable items by EOQ-based models

This paper develops economic-order-quantity model (EOQ)-based models with perishable items to evaluate the impact of a form postponement strategy on the retailer in a supply chain. We formulate models for a postponement system and an independent system to minimize the total average cost function per unit time for ordering and keeping a perishable end-products. An algorithm is given to derive the optimal solutions of the proposed models. The impact of the deterioration rate on the inventory replenishment policies is studied with the help of theoretical analysis and numerical examples. Our theoretical analysis and computational results show that a postponement strategy for perishable items can give a lower total average cost under certain circumstances. Keywords: Postponement strategy; Economic-order-quantity model (EOQ); Perishable items; Inventory management