A production and distribution planning of perishable products with a fixed lifetime under vertical competition in the seller-buyer systems: A real-world application

Abstract

Abstract Motivated by a real problem, in this paper, a new multi-period production-distribution planning (PDP) for perishable products with a fixed lifetime in a seller-buyer system is developed. The objective is to maximize the seller’s profit conditional on the optimality of the buyer in a three-level supply chain (SC), including the factories, distribution centers, and retailers. The factories and distribution centers act cooperatively at the leader level and, as the seller, make the location, production, inventory, and distribution decisions. While the retailers operate as the follower; therefore, a vertical competition is held in this SC. In addition to price, freshness owing to the perishability of the product is considered as an important competitive factor. Also, to encourage the retailers, three strategies in the development of a new demand function, including the return, discount policies, and credit period, are employed. Since the problem is NP-hard, a hierarchical heuristic approach based on Benders Decomposition Algorithm (BDA) and Genetic Algorithm (GA) is proposed. Finally, to demonstrate the applicability and efficiency of the developed model, it is applied to a real industrial case. The computational results of the problems in different sizes confirm the efficient performance of the proposed model and solution method.