Supply chain network design for perishable products under trade credit

We explore the supply chain network design problem for a retailer selling perishable products when the supplier provides trade credit and the deterioration rate can be reduced by freshness-keeping effort. Using a continuous approximation model, we derive the total cost of the supply chain, including facility set up and operation cost, ordering cost, freshness keeping cost, transportation cost, inventory-holding cost, and interest cost of trade credit. We prove the convexity of the total cost functions and derive the closed-form solutions of the decision variables, including the service regions of distribution centers, the replenishment cycle time, and the fresh food freshness keeping effort. Finally, we conclude with some managerial insights from the numerical analysis.