Multi-retailer Cold Chain Management with Multi-stage Quality Degradation and Stochastic Demand

Abstract

<p>Comprehensive models are developed to minimize the total costs of single-supplier (or manufacturer) multi-retailer cold chains in food industry systems. A cold chain is a supply chain with the storage temperature controlled. A well-operated cold chain can preserve the quality of food at a high level and reduce the cost resulted from the quality degradation. Quality degradation is influenced by storage temperature and time and can be measured by using many indices. The global stability index method and non-Arrhenius model are integrated to model the overall quality degradation of a product and to formulate the cost associated with quality degradation. The total cost of a cold chain is the summation of the supplier’s (or manufacturer’s) and retailers’ costs. The costs associated with the supplier or manufacturer include setup, holding, cooling, and transportation costs. The carbon emission cost in transit is also taken into account. The costs related with the retailers include setup, holding, and cooling costs as well as the loss of value resulted from quality degradation of a product. The customer demand of a product is modeled as both deterministic and stochastic. The following four scenarios are investigated: (1) the optimal replenishment times for the supplier and retailers are determined for a single-supplier multi-retailer cold chain with deterministic demand and quality degradation occurring only at the retailers’ side, (2) the optimal replenishment times for the supplier and retailers are found for a single-manufacturer multi-retailer cold chain having deterministic demand and quality degradation taking place in transit and at the retailers’ side, (3) the optimal production rate and replenishment time for the manufacturer as well as the optimal replenishment times and reorder levels for the retailers are determined for a single- manufacturer multi-retailer cold chain with stochastic demand and quality degradation occurring at the manufacturer’s and retailers’ sides, and (4) the optimal replenishment times and order up-to-levels for the vendor and retailers are found for a single-vendor multi-retailer cold chain having stochastic demand and quality degradation taking place at the manufacturer’s and retailers’ sides. </p>