A Location-Inventory Model for Multi-Product Supply Chain with Perishable Products and Price-Dependent Demand

Document Type : Research Paper


1 Department of Industrial Engineering, North Tehran Branch, Islamic Azad University, Tehran, Iran;

2 Department of Industrial Engineering, North Tehran Branch, Islamic Azad University, Tehran, Iran



One of the most challenging tasks in the perishable products industry is to control the inventory of products and find the optimum location to store them. This paper tries to respond to these challenges in a way that is close to reality. In this paper, a location-inventory model has been studied for a supply chain with perishable products, considering the dependence of demand to price. The investigated multi-product and multi-period supply chain includes manufacturers, distributors, retailers and customers. Products and centers of this chain are equipped with Radio Frequency Identification (RFID) technology. The location-inventory model, by simultaneously capturing strategic, tactical and operational decisions, can be very effective in increasing the supply chain efficiency. For this purpose, a mixed integer nonlinear programming model is presented. The purpose of the model is to maximize the profitability of the supply chain, which is achieved by the simultaneous decision-making of location, inventory, pricing and demand. Finally, in order to show the efficiency of the proposed model, numerous examples with various parameters are solved and sensitivity analysis is done. The results show that as the dependence of customer demands on price increases, it is inevitable that the supply chain sells the product to customers at a lower price and lower profit, and this causes an extreme decrease in supply chain profit. The lower dependence on the supply chain results in higher profit.


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