Optimal storage and shipment management of perishable agri-products with a hybrid priority policy: a case study

Abstract

ABSTRACT Management of agricultural supply chains is a very complex task due to some critical factors like perishability, demand- and price-variability, yield uncertainty. Motivated by a large agricultural firm that deals with planting, growing, harvesting and distributing cauliflowers, an optimization model is introduced for the simultaneous management of storage and shipment of agricultural products, aiming for profit maximization, while accounting for product perishability. In view of a contractual agreement, the firm has to ensure, along the entire season, the delivery of at least a given share of harvested products to the main contract-customer. Nonetheless, the firm can catch more profitable opportunities on the daily spot-market. The model embeds a hybrid fresh/old-first policy to account for the firm priority policy that aims to balance quality of products delivered to the main customer. The model has been adopted at both the tactical and the operational decision level. At the tactical level, the model has been used to select the fleet size and the maximum in-stock time of products, while at the operational one, the model has been used for the day-by-day planning of storage and shipment. Computational experiments show the possibility for the company to profitably upgrade its current operation practices.