A Supply Chain Design of Perishable Products Under Uncertainty

Abstract

Most supply chain (SC) studies often consider conventional products and assign little importance to the product perishability. In addition, most SC models in the literature assume that transportation routes are disruption-free. However, in reality, transportation routes are subject to various sorts of disruptions. In this chapter, we develop a stochastic mathematical model for a perishable product under conditions of route disruption and demand uncertainty. We investigate optimal facility location and distribution strategies that minimise the total cost of the SC. We propose two policies for decision-making under uncertainty. The first one is the risk-neutral policy in which the expected cost of the SC is minimised. The second policy is the risk-averse policy. The risk-averse policy is proposed through conditional value-at-risk (CVaR) approach in which the worst-case cost is minimised. The effectiveness of our model is demonstrated through an illustrative example. We observe that a resilient SC and a disruption-free SC have different designs. Finally, the effect of disruption uncertainties is presented through a statistical analysis.