Determination of outdate and shortage quantities in the inventory problem with fixed lifetime

The fixed lifetime perishable inventory system is examined and an estimator for the probability that an item will be sold in a period is obtained. The estimator for the probability that an item will be sold is given by theta/S where theta is the average demand per period and S is the inventory level at the start of a period. The probability is used to derive outdate and shortage quantities. Furthermore, shortage-outdate operating curve is obtained. The probability of running out of stock is obtained from the demand distribution. The operating characteristics obtained in this paper are very important because, for practical problems, available mathematically optimal solutions to the fixed lifetime perishable inventory problem cannot be realized due to their computational complexity. Guidelines for managing a real fixed lifetime perishable inventory system are given. A computer program has also been developed to compute the operating characteristics.