CONTRACTING AND ISSUING POLICIES FOR PERISHABLE GOODS SUPPLY CHAINS

Open Access
Author:
Cho, Joohyun
Graduate Program:
Industrial Engineering
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
None
Committee Members:
  • Paul Griffin, Thesis Advisor
  • Paul M Griffin, Thesis Advisor
Keywords:
  • buy-back contract
  • coordination
  • supply chain management
  • perishable goods
  • issuing policies
Abstract:
Perishable goods are closely related to our daily life, which is represented by groceries and pharmaceutical products. They differ from non-perishable items in that they have limited shelf life and have an additional cost when they expire. Another issue is how the dispatching order affects spoilage. From the perspective of individual optimization, the FIFO issuing policy has higher profit than LIFO. However, from a supply chain perspective, the upper stream’s issuing policy has an impact on the buyer and the whole supply chain. In this thesis, we examine a perishable good supply chain with a distributor and a retailer. We assume the two entities use a continuous review policy for inventory management with positive leadtimes. In addition, products have a limited shelf life and decay at a constant rate. An expired product has no salvage value. For this supply chain, we examine two things, 1) the feasibility of the buy-back contract as a coordinating mechanism, and 2) the impact of the distributor’s issuing policy on the profit of the retailer and the total supply chain. The results are that a buy-back contract can be designed to coordinate the independent participants under a Q(r) policy with positive leadtimes, and a LIFO issuing policy of the distributor can provide a higher profit to the retailer.