Simultaneous Pricing, Routing, and Inventory Control for Perishable Goods in a Two-echelon Supply Chain

Abstract

Due to the rapid development of technology in recent years, market competition and customer expectations have increased more than ever. In this situation, it is vital for businesses survival to determine the appropriate policy for inventory control, pricing, and routing, and decisions regarding each of them are often made separately. If the products have a perishable nature, it will be more important to determ ine the above policies. For integration of the decision-making concerning the three key components of the supply chain ,i.e. pricing, routing, and inventory control, two mathematical models were developed for a two-echelon supply chain of perishable items with direct shipment, where fixed lifetime is assumed in one model and random lifetime in another, so that profit is maximized. The proposed mathematical model was solved using the CPLEX solver package of the GAMS software for specification of the optimal policy of the supply chain. The results demonstrated that the CPU time needed for solving the mathematical model for perishable items with random lifetime was less than that for fixed lifetime, while the value of the objective function for products with fixed lifetime was greater than that for products with random lifetime.