Optimal Ordering and Screening Policy for Perishable Items with Imperfect Quality

Abstract

In reality, perishable products also contain defective ones before storage due to uncertainties during production process. In order to reduce the loss caused by the defective products, an inspection process is implemented by retailers. However, the screening is not always perfect due to the limited technical level. In view of the above, a retailer's perishable inventory model with defective items is established in this article. Two types of inspection errors, non-100\% screening and sales returns are all considered in the proposed model. The objective of the model is to minimize the retailer's expected cost per unit time and to find the optimal retail price, the screening rate and the order quantity. Numerical example and sensitivity analysis are provided to illustrate the presented model and provide some managerial insights.