LQ Suboptimal Control of Perishable Inventory Systems with Multiple Supply Alternatives

In this paper, new replenishment policy for perishable inventory systems is developed using a formal, control-theoretic approach. In the considered systems, the deteriorating stock at a goods distribution center is used to fulfill unknown, time-varying demand. The stock is replenished from multiple supply sources characterized by different delays in procuring the orders. In contrast to the classical stochastic, or heuristic approaches, a formal design methodology based on discrete-time linearquadratic (LQ) optimal control is employed. The obtained controller satisfies positivity constraints and ensures full demand satisfaction for any bounded demand pattern. It demonstrates improved performance as compared to the classical order-up-to policy.