Track: Supply Chain Management

Abstract

This paper considers a perishable material inventory problem from a multi-national company. The company purchases multiple perishable materials from different suppliers. Each material has a fixed expiry date given by the suppliers. The suppliers are delivering the materials to the company based on the orders placed by the company. There is a supply lead-time for a supplier to deliver the ordered materials to the company. Different suppliers have different prices and different supply lead-times. The values of materials are constant and drop to zero when their expiry dates are reached. While the expiry dates are fixed, the useful lifespan of the materials is affected by the supply lead time which is stochastic. The materials are consumed on a first-expired-first-out basis. We formulate the perishable material inventory problem as a stochastic programming. The numerical experiments are conducted to demonstrate the proposed inventory model can help the company to reduce the inventory cost significantly.

Keywords
Perishable Materials, Multiple Suppliers, Supply Lead-times, Stochastic Programming.