Integrated Producer-Distributor-Retailer Inventory Model for Cold Chain Items

Abstract

An integrated cold chain inventory model of a manufacturer, a distributor, and multiple retailers in a finite horizon is established. The three-echelon model assumes that the demand rate is a time-varying function and that the deterioration rate and production rate are constant. To reflect the value added to the cold chain inventory in this model, the objective function is defined to maximize the total system profit. The solution procedures, a numerical example, and a sensitivity analysis are provided. Exponential demand rate is used in the numerical example. An optimized inventory strategy is derived through a comparison of the profit. The results show that the integrated strategy leads to a higher total system profit compared to independent decision approaches.