A two-way logistic network design for deteriorating items considering preservation effort and cost minimisation

Abstract

The deterioration of many items, such as chemicals, volatile liquids, blood banks, and medicines, among other goods, is non-negligible in supply chain management. The transportation and holding of perishable inventories are important issues that need to be addressed by supply chain managers. Considering preservation efforts, this study deals with a two-way logistic network design problem for deteriorating items. A two-way logistic network provides two-way services. First, the collecting points and hubs transport items from customers in region A to those in region B. Second, the items are transported from customers in region B to those in region A. The effort to preserve deteriorating items lowers the deterioration rate but involves preservation costs and is also considered in the model. This model aims to determine the optimal number and location of collecting points, joint replenishment cycle time, and preservation effort while minimising the network cost. A nonlinear optimisation technique is used to solve the proposed problem. Finally, we present an example to illustrate the model and solution approach.