An approximate net profit model for a fixed-life perishable product in a two-echelon inventory system

This paper further extends the existing cost model for a fixed-life perishable product in a two-echelon inventory problem into the net profit model. The extended model is subsequently evaluated by comparing its results with those obtained from OptQuest, a commercial simulation-optimization package. Within a limited but reasonable time, the comparative results do not show a significant improvement of using OptQuest, but do confirm that the proposed model can already provide quite good quality of inventory control parameters for this system in a much shorter computational time. With some simple modifications to the proposed model, the model for slow-moving Poisson demand distribution for the two-echelon system is also developed and subsequently evaluated. The comparative results show that for the slow-moving demand, the Poissoh model is more effective than the model with normality assumption.