Managing Perishable Food Processing Supply Chains

Project: Research

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The food processing industry is crucial for our daily life. However, many foods and especially their raw materials are perishable due to spoilage. For example, fresh vegetables and milk could last only a few days while some fresh fruits could last a few weeks. One of purposes of the food processing industry is to extend the shelf lives of the raw materials. There are many incidents of food recalls or food-borne illness because of inappropriate uses of spoiled foods and their raw materials. On the other hand, the dumping of spoiled foods and their raw materials due to overstocking could create environmental issues and incur profit losses for firms. However, today's research on perishable inventory mostly focuses on how to make optimal procurements of perishable products in the presence of uncertain market demand. There is little attention paid to the perishable food processing supply chain. But spoilage can significantly affect production costs and production processes as the ability to convert fresh produce to a quality product decreases more quickly as time between harvesting of the raw materials and processing increases. This project aims to establish a new modeling framework to analyze the optimal coordination of supply, stocking, production and clearance sales of the food processing supply chain in the presence of spoilage.Existing works on perishable inventory systems are mostly concerned on how to make optimal procurement decisions when the product has a limited shelf life. This stream of research is relevant for supermarkets and sellers. However, many manufacturers in the food processing industry face a different challenge: the raw materials are perishable while the end products could have a relatively long shelf life. These manufacturers not only have to decide on how much to order for the perishable raw materials but also have to decide on how much to produce the end product from on-hand raw materials with different shelf lives remaining. In some cases, the manufacturers can hold clearance sales to dispose the raw materials in secondary markets to avoid potential spoilage. This project aims to address this challenging issue by providing a mathematical modeling framework for the perishable food processing supply chain and analyzing the optimal strategies on how to manage this type of supply chain.The major functions investigated in the perishable food processing supply chain of this project are as follows: the ordering policy for the raw material; the production policy of the end product; the resale or disposal policy for the raw material; and the resulting managerial insights. The objective of the proposed supply chain optimization problem is to minimize the overall system cost by taking into account of the different remaining shelf lives of the raw material and the spoilage cost. The first step of this project is to build a framework for the perishable inventory-production problem. The second step is to apply optimization tools and mathematical techniques to analyze and solve the perishable inventory-production optimization problem. The last but important step is to provide bounds for the optimal policy and devise simple and effective algorithms with low computational complexity. The performance properties of the proposed algorithms for practical implementation will be analyzed and evaluated.


Project number9042150
Grant typeGRF
Effective start/end date1/01/1528/12/17

    Research areas

  • perishable,multiechelon,dynamic programming,optimal policy,