A Location-Routing-Inventory Model for Perishable Items Using Fresher First and Older First Inventory Management Policies

Abstract

The purpose of the current research is to present a location-routing-inventory model for perishable products. The presented model is applied in a two-stage structure. The first-stage decisions confirm the establishment of distribution centers, whereas the second-stage decisions determine the other variables of the problem. For a better management of inventory, it has been used under the names of fresher first and older first policies. In the fresher first policy, the fresher items have a priority to be sent to the customer, whereas in the older first policy, the items with a longer age have the priority to be sent to the customer. The summary of the results of the models demonstrates that among the free, fresher first, and older first policies, it is the free policy that offers a higher profit function to the customer than the other two policies since it is more flexible and general,and encompasses these two extremes. The free policy lets the model determine which items to sell at any given time period in order to maximize profit.Moreover, in the older first policy, since the older items reach the customers sooner than the other items, the number of the expired items is reduced. However, this policy brings the lowest revenue to the customer. In the fresher first policy, since the fresher items are sold first and then the older items are sold, the number of the expired items is increased along the customer horizon. Nevertheless, the customer obtains more revenue compared with the older first policy.