Designing a resilient retail supply network for fresh products under disruption risks.

Abstract

The retail sector supplies the daily fresh products and increasingly plays a key role in the stability and livability of cities. However, public health events such as COVID-19 have caused frequent product shortages in recent years. The risk of fresh product shortages not only causes retailers to lose profits, but also affects the normal life of residents. In this paper, we address the problem of designing a resilient retail supply network for fresh products under the supply disruption risks and propose a bi-objective mixed-integer programming model. This model can help retailers to select suppliers, distribution centers and transportation routes under different scenarios and implement three resilience strategies, namely, priority supply, multiple sourcing and lateral transshipment. We use the ε -constraint method to transform the multi-objective problem into a single objective model and develop a Lagrangian relaxation algorithm to solve the different scale instances. This model is solved for a real-life case of a supermarket to obtain managerial insights. In the case study, this paper shows the set of Pareto fronts with different inventory periods, maximum allowed decay and decay rate. We calculate the expected total cost under targeted disruption scenarios and evaluate the effectiveness of these resilience strategies when implemented concurrently or separately. Our results identify the most critical suppliers and distribution centers that should be fortified. We elaborate that more resilience strategies are not always better and managers need to take appropriate resilience strategies according to their own problems.