One of the important characteristics of perishable products, like eggs, milk, dairy
products, vegetables, etc., is their biotic energy; the period of time for which their
quality remains acceptable is very short, which means they are easily perishable in the
course of transportation and storage. Perishability is one of the important factors that
needs to be taken into account in management of perishable products; it is crucial that
management of inventory and procurement of perishable products take into
consideration the perishability of the products. On one hand, the price of perishable
products is time-sensitive, implying that the price decreases dramatically as the end of
the product’s life approaches. On the other hand, a shortage of perishable products
while there is demand for the products may result in significant loss of revenue.
Establishing an efficient and effective inventory and procurement system to obtain the
right quantity, of products of the right quality, from the right source, and to have the
products delivered to the right place at the right time with right price can have a
positive influence on a company’s profitability and competitive advantage. However,
achieving this is constrained by issues of competition, profitability, product harvest
and other relevant conditions.
Because of the stochastic nature of factors that affect perishable products demand
and supply, it is very difficult for a simple model to improve forecasting accuracy. In
this thesis, to resolve this problem, many indeterminable factors affecting the future
demand for perishable products are considered in the dynamic forecasting model.
Because supply and demand of perishable products are dynamic (i.e. volatile) in
nature, it is advisable to use the integrated collaborative forecasting method, a CPFR
(Collaborative planning, forecasting and replenishment) management method, to
increase the accuracy of forecasts of supply-demand in supply chains with perishable
products. The purpose of using this model is also to build a scientific strategic
foundation for dealing with the inventory replenishment problem. The significance of
this research is that it provides new concepts for managing perishable products
procurement and inventory decisions that help improve the rationality of inventory
replenishment in practical situations by accurately forecasting demand, which leads to
more intelligent decision making.
First, we give an introduction of CPFR, and analyse the applicability of CPFR
management strategies to perishable products supply chain management.
Second, an investment game model is built and two classifications of equilibrium,
i.e. interior equilibrium and boundary equilibrium, are defined, and their existence is
proved. The notion of equilibrium stability is put forward, and the stability solution of
the investment game model is also given.
Third, a collaborative (between a retailer and a supplier) forecasting model is
constructed. In this model, evolution of demand forecasts for perishable products is
analysed, taking into consideration forecast adjustment variable ,
, correlation ρ between adjustment variables , and , , and the forecasting capability η .
Furthermore, an inventory replenishment model is put forward by introducing
collaborative forecasting model to inventory replenishment strategies of the retailer
and the supplier. Simulation of this model shows that when both the supplier and the
retailer follow collaborative forecasting rules, inventory level decreases and the cost
of supply chain as a whole reduces significantly. Another inventory replenishment
model that aims at achieving the highest profit for the whole supply chain is also
studied in detail. While demand and the lead time of order are all stochastic, price
discounts for perishable products are included, and shortage of goods is allowed.
Finally, a three-level supply chain model with perishable products that includes a
supplier, a producer and a retailer is constructed. We introduce a cost sharing contract
to achieve efficient cooperation between partners of the supply chain dealing in
perishable products. Such an integrated approach can reduce each partner’s cost
compared to costs incurred when partners take independent decisions. The model can
help enhance collaboration in, and profitability of, supply chains.
| Date of Award | 17 Feb 2010 |
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| Original language | English |
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| Awarding Institution | - City University of Hong Kong
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| Supervisor | Kin Keung LAI (Supervisor) |
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