DSM control of inventory systems with deteriorating stock and multiple supply sources

In this paper we address the problem of efficient control of periodic-review perishable inventory systems. In the considered systems the stock used to fulfill unknown, variable demand deteriorates exponentially, and is replenished with delay from several supply sources. The supply options are characterized by different lead times, spanning multiple review periods. We develop a new supply policy based on discrete-time sliding-mode (DSM) control. The proposed DSM controller with the sliding plane selected for a dead-beat scheme ensures the maximum service level with smaller holding costs and smoother ordering signal as compared to the classical order-up-to policy.