Smith predictor based control of continuous-review perishable inventory systems with multiple supply alternatives

In this paper we address the problem of efficient control of continuous-review perishable inventory systems. In the considered systems the goods at a distribution center used to fulfill unknown, variable demand deteriorate at a constant rate. The stock is replenished with delay from multiple supply sources characterized by different latency in procuring orders. We develop a new supply policy which incorporates the Smith predictor to counteract the adverse effects of delay. The pro posed policy guarantees that the assigned storage space at the distribution center is never exceeded which means that the cost of emergency storage is eliminated. Moreover, we show that with appropriately chosen controller parameters all of the demand imposed at the distribution center is realized from the readily available resources.