Market-driven production lot-size and scheduling with finite capacity for a deteriorating item

In this paper, we propose a mathematics-based decision model that solves optimally the production lot-size and scheduling problem taking into account the dynamic aspect of customer demand and marketing planning, the deteriorating property of a production item, and the restriction of finite capacity in a firm. The potential applications of the model can be used as an add-on optimiser, which integrates and coordinates distinct functions within a firm, e.g. marketing and production planning, with the objective of maximising the total profit over a finite planning horizon. To ascertain the properties and behaviour of the proposed model and solution procedure, a case study for sliced raw fish at a local supermarket of a large national retail chain is carried out.