Optimal Ordering Policy for Perishable High Technology Products Based on Two-Direction Substitutable Demand

For the maximize profits, the decision of how to obtain optimal quantity for the two kinds of perishable high-tech products is discussed, with two-direction substitutable demand and considering the cost of out-of-stock products. By establishing stochastic demand model, the optimal ordering quantity policy is derived, with two-direction substitutable demand. A numerical example is used to demonstrate that vendors would gain more profits due to taking into account the two-direction substitution between the perishable high-tech products.