Sustainable Supply Chain Network Design for Perishable Products

Abstract

This study addresses the problem of sustainable supply chain network design for perishable products. Perishable products lose their value or deteriorate in a short time, from the moment they are produced, therefore storing products in warehouse should be continuously monitored in order to avoid waste and reaching expiration. A mathematical model is developed to design sustainable, single product, multi period, three-echelon supply network including manufacturer, warehouse, and customer. The problem is formulated as mixed-integer nonlinear programming (MINLP). The model is solved by both Excel and GAMS solvers. The aim is to find the best configuration of the supply chain and to decide the quantity of units to be produced at each period, without extra needless production, and also the quantities of units to be transferred from manufacturer to warehouse, and from warehouse to customer. This decision relies on the perishability of products, the demand of the customers, and handling inventory according to the different ages of products in the warehouse. First-in First-Out (FIFO) inventory policy is adopted by most of the producers in the field of perishable products. It is favoured in the real life industry as it avoids wastes and expiration of products. The FIFO inventory policy helps in organizing the flow of products in the warehouse, subsequently no products can expire. It assumes that the products produced first (older products) are the ones sold first. The recent ones are to be left as inventory. As a result, the remaining inventory consists of the most recent units. FIFO policy is best for perishable products where inventory has a short shelf life-time. This is because it prioritizes the oldest products that will maximize the use of inventory before products perishes in order to prevent expiration of products and to minimize costs arising from those expired products. The proposed model’s objectives are maximizing the profit and minimizing the environmental impact by deciding the optimal quantities transferred between the different facilities to prevent expiration of products. The proposed model can be used to design supply chain network for perishable products, it optimizes multi-period network while considering