Agri-food supply chain design for perishable products: application to small-scale farmers

Modelling the deterioration of perishable products in logistics systems is quite challenging as it depends on the nature of the product and environmental factors such as humidity and temperature in transport and storage processes. This paper proposes a mixed-integer linear programming model for designing a supply chain network of perishable agricultural products within a strategic and tactical-operational decision framework. The proposed framework considers price sensitivity to product quality, which decreases as the product approaches shelf life, and the possibility of choosing between refrigerated and non-refrigerated facilities, as the type of facility influences the quality and, consequently, the price of the product over the storage period. Based on deterministic scenarios, the model optimises warehouse type selection and location, market assignment to located warehouses, farmer selection and related product purchasing/producing, and inventory evolution, considering warehouse setting, purchasing, inventory, and transport costs, along with income from product selling in the existing markets. The final selling prices in the markets depend on product quality or deterioration level, which relies on how long products are stored in the warehouses. The model is applied to a real-world case of small farmers in Colombia, considering different product demand profiles. Results show that including deterioration of perishability products in supply chain design may significantly impact strategic decisions on network design, estimations of chain revenue, and inventory/capacity relationships. Also, the synchrony between supply and demand strongly influences the network structure. Finally, the choice of refrigerated facilities might effectively increase the profit of the agri-food supply chain over regular facilities.