Analysis Postponement

This is the Pre-Published Version.

Analysis of postponement strategy for perishable items by
EOQ-based models
J. Lia,c, T.C.E. Chengb,∗ , S.Y. Wanga a Institute of Systems Science, Academy of Mathematics and Systems Sciences,
Chinese Academy of Sciences, Beijing, 100080, China

b

Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong c Department of Mathematics, Qufu Normal University, Qufu, Shandong, 273165, China

Abstract

This paper develops 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 n 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

1. Introduction

Postponement, also known as late customization or delayed product differentiation, refers to delaying some product differentiation processes in a supply chain as late as possible until the supply chain is cost effective (Garg and Lee, 1998). Postponement is one of central features of mass customization (van Hoek, 2001). It has been reported that postponement strategy is highly successful in a wide range of industries that require high differentiation, e.g., high-tech
∗

Corresponding author. Tel.: [phone]; fax: [phone].
E-mail address: [e-mail] (T.C.E. Cheng)

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industry, food industry,

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