Incorporating product decay during transportation and storage into a sustainable inventory model

With the increased attention to global warming, governments set new policies for companies to control greenhouse gas (GHG) emissions. Therefore, supply chain decision-making should consider both costs and emissions of main logistics activities such as production, storage, and transportation. It is especially important for perishable goods, as the decay of products brings additional economic and environmental challenges for production, storage, and distribution operations. Most research on inventory models for perishable products focuses on minimizing the total cost and ignores emissions. There are a few papers that consider both costs and emissions. However, since they ignore product decay during transportation, they do not fully support real-life decision-making on perishable products. This paper presents a sustainable inventory model for a perishable product with deterministic demand. Our model is the first to consider product decay during transportation explicitly. Therefore, it can assess different transportation alternatives with different costs, emissions, and lead times to select the most sustainable and cost-efficient option. It is also the first to integrate the emissions of production, inventory holding, transportation, and disposal in making transportation mode selection and inventory control decisions. The model is solved analytically, and numerical experiments show that taking product decay during transportation into account leads to different optimal solutions than those proposed by existing models, which neglect product decay during transportation. Finally, we perform sensitivity analyses to show the impact of key parameters on the improvement potential of incorporating product decay during transportation.