A holistic framework for lot sizing problem for fast-moving perishable products

Abstract

One of the major challenges that manufacturing companies face today is the issue of addressing various aspects of perishable products in a supply chain environment. To address this issue, the integrated lot sizing problem for a perishable product was investigated in the present work. The problem was modeled as a single-vendor multiple-buyer system. A variant of the truckload discount scheme was applied, and the proposed model was formulated as a Mixed Integer Program (MIP). The traditional warehouses were replaced by 'cross-docks', and situations featuring beneficial cross-docking are highlighted. The problem of fleet selection was addressed, and various strategies for minimizing the vendor cost were also highlighted for centralized and decentralized supply chains. Sensitivity analysis was then carried out on various input parameters such as setup cost at the plant, variable transportation cost, fixed transportation cost, setup cost per order, holding cost, and lost cost that underscore the significant impact of economies of scale in transportation on the total supply chain cost. The analysis of a lead time-cost trade-off revealed that alternate modes of transportation that significantly reduce the lead time of transportation could be explored, thereby minimizing the total supply chain cost.