ABSTRACT
The developments in Chapters 4 through 8 were all based on the assumption of a demand pattern for an item continuing well into the future (possibly on a time-varying basis)—that is, “a going concern” with the opportunity to store inventory from one selling period to the next. In this chapter, we remove the ability to indefinitely store inventory, due to perishability or obsolescence. Decision situations where this type of framework is relevant include
1. The newsvendor: How many copies of a particular issue of a newspaper to stock? 2. The garment manufacturer (or retailer): What quantity of a particular style good should be
produced (or bought for sale) prior to the short selling season? 3. The Christmas tree vendor: How many trees should be purchased to put on sale? 4. The cafeteria manager: How many hot meals of a particular type should be prepared prior to
the arrival of customers? 5. The supermarket manager: How much meat or fresh produce should be purchased for a
particular day of the week? 6. The administrator of a regional blood bank: How many donations of blood should be sought
and how should they be distributed among hospitals? 7. The supplies manager in a remote region (e.g., medical and welfare work in northern
Canada): What quantity of supplies should be brought in by boat prior to the long winter freeze-up?
