Inventory management and delivery of perishable products with stochastic demands and risks consideration

Abstract

In the agri-food supply chain, the perishable nature of the commodities opens a series of challenges at all decision levels: strategical, tactical and operational. This paper presents an age-based model for the inventory-routing problem of perishable commodities with stochastic demands. To deal with this source of uncertainty, the conditional value-at-risk (CVaR) has been adopted as a risk measure, and then the model has been applied to the agri-food supply chain under investigation. The model is the core of a dynamic approach for the optimal distribution and inventory planning over a short-medium horizon. To address a problem as realistic as possible, we assume that the demand for products of each age is unknown and we model this uncertainty by means of random variables with a probability distribution that can be estimated from historical data. Computational experiments on test cases based on a real-life agri-food company located in Italy show the effectiveness of the proposed approach for evaluating different risk attitudes.