An integrated inventory system for perishable goods with backordering

We present an integrated inventory model for perishable goods in which backorder is allowed. The model considers the impact of marketing strategies such as pricing and advertising as well as backorder decisions on the profitability of the system. We assume that for certain perishable products, it is feasible for managers to plan for periods of shortage during an inventory cycle. A computer program is developed to determine the optimal production quantity (EPQ) and backorder level that maximize the net profit of the system. A numerical example is used to study the behavior of the model. (C) 1998 Elsevier Science Ltd. All rights reserved.