OPTIMIZING PERISHABLE INVENTORY SYSTEMS: A DOUBLE-ORDER POLICY WITH WEIBULL-DISTRIBUTED DEMAND

Abstract

This study develops a new ordering policy for a Fixed Lifetime Inventory System (FLIS) by integrating the three-parameter Weibull distribution to model demand distribution. The proposed double-order inventory model addresses the challenges of perishability, demand uncertainty, and cost optimization by determining replenishment decisions based on the remaining useful lifetime of inventory items rather than stock levels  A sensitivity analysis reveals that the Weibull scale parameter   shows an inverse relationship with total inventory cost in the double-order inventory system, while as the shape parameter  increased, it exhibits direction relationship with the cost components, though very minimal. On the other hand, smaller values of the location parameter  caused a slight decrease to the cost components, while the Economic Order Quantity (EOQ) remain stable.  Under the same demand expectation, the model demonstrates superior performance compared to the Poisson based double-order policy, by effectively reducing outdate cost by 40.5%. Practical implications highlight the importance of accurate demand estimation and dynamic inventory control systems for industries dealing with perishable goods.  The study contributes to inventory management literature by bridging the gap between Weibull-distributed demand modeling and double-order policies, offering a robust framework for optimizing perishable inventory systems.