Modelling and analysis of inventory replenishment for perishable agricultural products with buyer–seller collaboration

Abstract

In this article, we study the inventory replenishment model for perishable agricultural products in a simple two-level supply chain. Collaborative forecasting is introduced into the inventory replenishment decisions to avoid overstocking and understocking of agricultural products, and to maximise profits. We analyse the model with ordering cost, holding cost, shortage cost, deterioration cost and opportunity lost cost of perishable agricultural products. Extensive numerical analysis is carried out to study the performance of the inventory policy. The optimal replenishment policy that minimises the total cost can be obtained from the model. It has demonstrated that the supply chain cost decreases with supplier and retailer's collaborative forecasting.

Keywords:

• perishable agricultural products
• inventory replenishment
• collaborative forecasting

Acknowledgements

The authors would like to thank the editor and the anonymous reviewers for their valuable comments and suggestions, which have improved the quality of the article immensely. The work described in this article was partially supported by a grant from City University of Hong Kong (Project No. 7002258).