The design and planning of an integrated supply chain for perishable products under uncertainties: A case study in milk industry

Abstract

Purpose

This paper aims to design an optimal supply chain network and to develop a suitable distribution planning under uncertainty for perishable product's supply chain. The ultimate goal is to help in making decisions under uncertain environments.

Design/methodology/approach

In this paper, stochastic programming is used under conditions of demand, supply and process uncertainties, and a non-linear mathematical model is developed for perishable product’s supply chain. Authors’ study considers disruptions in transportation routes and also within the facilities and investigates optimal facility location and shipment decisions while minimising the total supply chain cost. A scenario-based approach is used to model these disruptions. The retailer level uncertainty due to demand-supply mismatch is handled by incorporating the newsvendor model into the last echelon of supply chain network. In this paper, two policies are proposed for making decisions under uncertain environments. In the first one, the expected cost of the supply chain is minimised. To also consider the risk behaviour of the decision maker, authors propose the second policy through a conditional value-at-risk approach.

Findings

Authors discuss the model output through various examples that are provided via a case study from the milk industry. The supply chain design and planning of the disruption-free model are different from those of the resilient model.

Practical implications

Authors’ research benefits the perishable products industries which encounter the disruption problems in their transportation routes as well as in the facilities. Authors have demonstrated the research through a real-life case in a milk industry.

Originality/value

The major contribution of authors’ work is the design of the supply chain network under disruption risks by incorporating aspects of product perishability. This work provides insight into areas such as the simultaneous consideration of demand, supply and process uncertainties. The amalgamation of newsvendor model and the approximation of the non-linearity of retailer level cost function especially in the context of supply chain under uncertainty is the first of its kind. We provide a comprehensive statistical study of uncertainties that are present in the supply chain in a unique manner.

Citation

Dutta, P. and Shrivastava, H. (2020), "The design and planning of an integrated supply chain for perishable products under uncertainties: A case study in milk industry", Journal of Modelling in Management, Vol. 15 No. 4, pp. 1301-1337. https://doi.org/10.1108/JM2-03-2019-0071