RFID and perishable inventory management with shelf-space and freshness dependent demand

Although there is an extensive set of literature on inventory management for perishable items, a majority of these operate at a higher level where all items are assumed to have a fixed shelf-life. However, depending on how they are handled in transit as well as during storage, the remaining shelf-life of perishable items can vary. We consider perishable inventory management with demand that is directly dependent on the amount of shelf-space allocated to the item of interest as well as its instantaneous quality. We assume the existence of detailed information at the item-level generated through auto-ID technology such as RFID with necessary sensors. Specifically, we extend the model in Bai and Kendall (2008) to incorporate item-level quality information and use Genetic Algorithms to solve our model. Our results show that the incorporation of item quality increases the resulting overall profit to the retailer. (C) 2013 Elsevier B.V. All rights reserved.