Two echelon supply chain model for deteriorating items with effective investment in preservation technology

Abstract

The objective of this study is to develop a model for a two echelon supply chain, in which retailers’ demand is seasonal with expiration date and he invests on the preservation technology to reduce the rate of product deterioration. This paper examines consumers’ response to expiration dates for grocery store perishable products. We develop a conceptual framework that captures the frequency with which consumers check expiration dates and their willingness to pay for a perishable over its shelf-life.A solution procedure is presented to determine an optimal replenishment cycle, shortage period and preservation technology cost such that the net profit for the supply chain is maximised. A numerical example and sensitivity analysis are given to illustrate the model.