We consider a continuous review perishable (s,S) inventory system with a service facility consisting of a waiting hall of finite capacity and a single server.We assume two types of customers,ordinary and negative,arrive according to a Markovian Arrival Process (MAP).An ordinary customer joins the queue and a negative customer instead of joining the queue removes one ordinary customer from the queue.The removal rule adopted in this paper is RCE (removal of a customer from the end).The individual customers unit demand is satisfied after a random time of service which is assumed to have a phase-type distribution.The life time of each item and the lead time of the reorders have been assumed to be independent exponential distributions.The joint probability distribution of the number of customers in the system and the inventory level is obtained for the steady state case.Various stationary system performance measures are computed and the total expected cost rate is calculated.The results are illustrated numerically.