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Sustainability 2017, 9(7), 1195; doi:10.3390/su9071195

The Supply Chain Design for Perishable Food with Stochastic Demand

1
School of Economics and Management, Changshu Institute of Technology, Changshu 215500, China
2
Jiangsu Key Laboratory of Modern Logistics, School of Marketing and Logistics Management, Nanjing University of Finance and Economics, Nanjing 210023, China
3
Business School, Nanjing University, Nanjing 210093, China
4
Stanley Ho Big Data Decision Analytics Research Centre, the Chinese University of Hong Kong, Shatin, New Territories, Hong Kong 999077, China
*
Author to whom correspondence should be addressed.
Received: 25 May 2017 / Revised: 23 June 2017 / Accepted: 30 June 2017 / Published: 11 July 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
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Abstract

It has been a challenging task to manage perishable food supply chains because of the perishable product’s short lifetime, the possible spoilage of the product due to its deterioration nature, and the retail demand uncertainty. All of these factors can lead to a significant amount of shortage of food items and a substantial retail loss. The recent development of tracing and tracking technologies, which facilitate effective monitoring of the inventory level and product quality continuously, can greatly improve the performance of food supply chain and reduce spoilage waste. Motivated by this recent technological advancement, our research aims to investigate the joint decision of pricing strategy, shelf space allocation, and replenishment policy in a single-item food supply chain setting, where our goal is to maximize the retailer’s total expected profit subject to stochastic retail demand. We prove the existence of optimality for the design of the perishable food supply chain. We then extend the single-item supply chain problem to a multi-item setting and propose an easy-to-implement searching algorithm to produce the optimal allocation of shelf space among these items for practical implementation. Finally, we provide numerical examples to demonstrate the effectiveness of our solution. View Full-Text
Keywords: food supply chain; shelf space allocation; deterioration; pricing strategy; stochastic demand food supply chain; shelf space allocation; deterioration; pricing strategy; stochastic demand
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Yang, S.; Xiao, Y.; Kuo, Y.-H. The Supply Chain Design for Perishable Food with Stochastic Demand. Sustainability 2017, 9, 1195.

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