Optimising logistics packaging and replenishing policies for deteriorating items in e-commerce environments

This paper develops an instantaneously deteriorating inventory model for an e-commerce environment wherein the retailer employs an improved logistics packaging policy to reduce the rate of damage to goods in transit. Because of the difficulty in finding a closed-form solution, an efficient algorithm has been developed to find the optimal solution for the proposed model. The theoretical results show that the deteriorating rate could impact the optimal solution and the average total profit. The replenishment time for the proposed model with return rate is shorter than that for the traditional EOQ model. Numerical examples illustrate the proposed model and algorithm. Moreover, sensitivity analysis illustrates the effects of four parameters of importance (i.e., set-up cost, demand rate, holding cost, and deteriorating rate) on the optimal strategy. The discussion of numerical and sensitivity analysis results provide some managerial insights. [Submitted: 6 June 2023; Accepted: 15 February 2024]