Differentiated Service And Inventory Control Policies For Deteriorating Product

On the basis of summarizing and commenting on relevant literature, this dissertation focuses on differentiated service and inventory control policies with stochastic multi-class demand in deteriorating inventory problem. To take account of inventory decaying and the difference of customer purchasing behavior, the integrated inventory control and differen-tiated services policy models are developed to study how to make orders, control inven-tory and satisfy demand with differentiated services policy by a retailer to maximize her profit in stochastic multi-class demand and inventory decaying environment. Specifically, this dissertation has contributed in the following aspects:Firstly, this dissertation analyzes differentiated service and inventory control problem for deteriorating product from the point of product life-cycle feature and customer pur-chasing behavior. A framework of the integrated inventory control and differentiated ser-vice policies for deteriorating product considering purchasing behavior is put forward. The result shows that the proposed policies can reduce the loss of inventory decaying and en-hance profit greatly when the quantity in stock diminishes over time stochastically.Secondly, this dissertation considers a retailer's differentiated service policies and decaying inventory control problem, in which both the demand and the lifecycle of the product are stochastic. The stock of the product diminishes over time with an exponential deterioration rate. Demand classification method is proposed according to purchasing be-havior, which considers contract price and expected delivery time, and a differentiated service policy called Differential Service Policy (DSP) is put forward for different types of customers. Through a dynamic programming model, the optimal inventory control and service policy with time-based critical inventory level for each customer class is derived. Comparing with the first-come-first-served service policy (FCFS), numerical analysis shows that the proposed policies can significantly improve expected profit and reduce the loss caused by product deterioration.Thirdly, on the basis of DSP, lost sales are analyzed when immediate service is un-available. Price discount is introduced to induce backorders to wait for fulfillment from the next reorder. Through dynamic programming, we derive the optimal policy for the re-tailer, which consists of replenishment policy as well as dynamic differential service and price discount policy called Differential Service Policy with Price Discount (DSDP). Comparing with the first-come-first-served policy with Discount Only (DO), the result shows that the proposed policy can improve the retailer's profit significantly and cut down the loss caused by product deterioration. Besides, in contrast to DSP, the DSDP policy can reduce demand loss, get more profit and reduce inventory decaying loss.Finally, a Differential Service with Re-service Waiting Demand Policy (DSRWDP) is proposed to solve the problem that the fill rate of low-value customer is lower than normal under DSP. When the customer is waiting, he/her may be offered the product when the rest of the cycle time is short and the remaining inventory is high. An integrated inventory control and differential service with re-service waiting demand model is built using dy-namic programming. To simplify the model, we only consider two classes of demand. Comparing with DSP, the numerical analysis shows that the fill rates of low-value cus-tomer in re-order cycle can be improved significantly. The holding cost, backorder cost and the loss caused by product deterioration are all reduced and expected profit is im-proved observably.