A deteriorating food preservation supply chain model with downstream delayed payment and upstream partial prepayment

Abstract

This paper investigates a food supply chain model consisting of the supplier, food producer and multi-retailer of a deteriorating item under fully delay-in-payment and partial advance payment scheme. The deterioration rate of raw material is dependent on temperature and other environmental factors with respect to time. Here, the food producer prepares food after collecting the raw material from the supplier and then storing it in cold storage. The refrigeration cost is dependent on the occupied volume in the cold storage (where the products are preserved for freshness) and power consumption. The supplier offers delay-in-payment to stimulate the food producer to buy more raw material (which minimizes the holding cost and earns more revenues), whereas the food producer takes the partial advance payment on purchase cost from the retailers to ensure the order quantity. A mathematical model is developed to obtain optimal production time and the optimal number of deliveries so that the average profit of the food producer is maximum. Finally, a numerical example and sensitivity analysis of the key parameters are provided to illustrate and test the feasibility of the proposed model.