Optimal shelf space strategy for the fresh agricultural product with a two-warehouse inventory system

The optimal shelf space strategy for the fresh agricultural product in a two-warehouse inventory system is studied in which the different loss rates of the agricultural product reserved in the backup warehouse and displayed on the shelf space are considered. The instantaneous inventory levels in the back-up warehouse and on the shelf are got. Then the loss rate and holding cost of the fresh agricultural product are got. The optimal conditions of the shelf space and retail price under which the retailer can get the optimal profit are got. The results are illustrated by numerical examples and sensitivity analysis is carried out.