This article deals with a single perishable item, continuous review, two-echelon serial inventory system consisting of a warehouse and a retailer. Customer demands at the retailer are assumed to be Poisson. All items have a fixed shelflife and start to aging on their arrival at the retailer. Demand that cannot be met immediately at the retailer is lost. All transportation times are fixed. If there is any stock in the warehouse, the leadtime for the retailer would be the transportation time from the warehouse. Otherwise the retailer orders are met with a delay. In this article, using an approximate technique, we first present a heuristic for finding cost-effective base stock policy and then develop a simulation-based neighborhood search procedure to modify the quality of the solution. Also, a numerical experiment is carried out to evaluate the effectiveness and accuracy of the procedures. The results reveal that the approximate model performs rather well.
