A Robust Two-Stage Stochastic Location-Routing-Inventory Model for Perishable Items

Abstract

The aim of this study is to develop a robust two-stage stochastic location-routing-inventory model for perishable items. The proposed model is implemented in a two-stage structure. The first-stage decisions determine the establishment of distribution centres and the second-stage decisions identify the other variables of the problem. In order to reduce the effect of different scenarios on the outputs of the problem, the two-stage model is developed to a robust model. Two variability criteria called 'Partial Lower Deviation from Mean' (PLDM) and 'Partial Lower Deviation from Target' (PLDT) are considered for the problem. This robust model can manage the variability of different scenarios considering the variability needed for the problem. The summary of the results of the models indicate that the supply cost, the setup cost, the vehicle supply cost, and the production cost comprise 55%, 28%, 3%, and 14% of the total costs of the supply chain, respectively. Similarly, the ratio of net profit margin to the total revenue of the supply chain derived from the division of the objective function by the revenue function is 15%. Among free, fresher first, older first, and mixed policies, the free policy provides the decision maker with more profit than the other three policies since it imposes less constraints on the model.

Keywords

• Inventory
• Locating
• Perishable items
• Robust two-stage stochastic model
• Routing