Optimal replenishment strategy for a single-manufacturer multi-retailer cold chain considering multi-stage quality degradation

Abstract

This paper develops a model for a cold chain operated among a single product manufacturer and multiple retailers to minimize the total cost of the chain. A distinguishing feature of the cold chain is that the quality of the product degrades with time. The storage temperature and time influence the degradation rate. In this context, quality can be measured using multiple distinct indices. A global stability index is used to quantify the overall quality. The non-Arrhenius model is exclusively applied to measure the quality degradation during the transportation and at retailers' storage as the product moves in the cold chain. Optimal replenishment times for the manufacturer and retailers are decision variables and the cold chain's total cost includes the cooling cost, carbon emission cost, and loss of value in addition to the traditional supply chain costs. It is found that for a given manufacturer's replenishment time, the total cost is convex on each retailer's replenishment time. Hence, an algorithm is developed based on this property to find the optimal replenishment times for the manufacturer and retailers. This paper also investigates how specific cold chain parameters influence optimal decisions and the total cost. The analyses show that the resulting costs will be significantly higher if quality degradation is ignored in a cold chain.