Modeling and Optimization of Inventory and Sourcing Decisions with Risk Assessment in Perishable Food Supply Chains

Today, the food industries are transforming towards interconnected global networks. Food safety scandals and globalization of food production has sparked heightened public attention to the risks in the supply chain from farms to consumers. In response, it is of great importance that food supply chains consistently provide high quality foods, safety guarantees and transparency. The assessment of the entire food supply chains should now be integrated with risks assessment, food quality and safety management, sustainability and traceability. For inventory management, the focus shifts from merely minimizing inventory costs, to carefully balancing with wastage and risks exposed. Consequently, this paper proposes a model to determine inventory and sourcing decisions in food supply chains. The model aims to minimize total costs and reduce wastes from unqualified items, while achieving necessary robustness in coping with risks generated. Food quality degradation is integrated in the final model for the purpose of product quality control throughout the food supply chain.