Bi-objective Reliable Multi-Product Location-Inventory Problem Design with Perishable Products and Freshness-dependent Demands

Abstract

This paper tackles a bi-objective location-inventory problem (LIP) in a three-echelon multi-product supply chain with perishable products. Demands from customers are stochastic and freshness-dependent. Moreover, reliability issues are considered in terms of three different levels of failures for the distribution centres, namely disastrous, serious and partial. We also assess how well the customers' demands are met with products that are fresh enough and regard this as a reliability indicator from the viewpoint of customers. The problem is formulated as a mixed integer nonlinear programming (MINLP) model and six multi-objective decision-making (MODM) methods namely individual optimisation method, goal programming method, LP metrics/global criteria method, utility function method, goal attainment method, and maxi-min method are applied to solve test problems of different sizes. Finally, to select the best method, we used the filtering/displaced ideal solution (DIS) method where the goal programming method turned out to outperform other methods. Goal programming was then applied for sensitivity analysis of the problem.