A solution algorithm for integrated production-inventory-routing of perishable goods with transshipment and uncertain demand

Abstract

Supply and distribution management of blood products is a challenging task due to their short lifespan. The problem is even more sophisticated considering uncertain demand for these products. This paper addresses integrated inventory-routing of blood in a supply chain network consisting of a single supplier and a group of blood centers. Transshipment among blood centers is allowed to decrease the cost of excess inventory and shortage of goods. A mathematical model is developed that decides on the optimal quantity of supplied blood, delivery plan, inventory level, and quantity of products transshipped between blood centers with the objective of minimizing total costs. In addition, a robust optimization approach is adopted to deal with uncertainty in demand. Since the proposed model is NP-hard, a heuristic solution algorithm is developed that improves solution quality by determining the most efficient change in vehicle routes in each search stage. The efficiency of the proposed algorithm is examined in a set of numerical experiments and using data from a real case of supply and distribution management of blood platelets. The results indicated that allowing transshipment reduces the need for supply capacity at the supplier, product shortage, inventory level, and the total cost.