Inventory Depletion Management When the Field Life is Random

This paper considers the problem of describing optimal issuing policies when the field life, X(s), is a nonnegative random variable. A new optimality criterion involving stochastic ordering is introduced and sufficient conditions given for the optimality of FIFO and LIFO. Two specific models of perishable inventory are then considered; Model I allows for the perishing of items in the stockpile and Model II does not. It is demonstrated that both LIFO and FIFO are optimal for Model I when the items age at the same rate in the stockpile as in the field. Under the assumption that X(s) is uniformly distributed the optimality of FIFO is established for Model II.