An Integrated Production-distribution Problem of Perishable Items with Dynamic Pricing Consideration in a Three-echelon Supply Chain

Document Type : Original Article


Department of Industrial Engineering, Faculty of Engineering Management, Kermanshah University of Technology, Kermanshah, Iran


The importance of employing appropriate pricing strategies for perishable products within the supply chain cannot be overstated. Pricing is a cross-functional driver of each supply chain, playing an irrefutable role in the success and profitability of the supply chain alongside other factors such as inventory and production policies which has been investigated in this research. The research emphasizes the significant role of pricing in profitability, along with the interplay of production policies and inventory control, highlighting their collective influence on financial outcomes, the subject of dynamic pricing within a multi-product, multi-period problem in a three-level supply chain with perishable products has garnered relatively limited attention. The study focuses on optimizing an integrated production-distribution system with multiple producers and distribution centers serving specific customer groups. Direct shipments between production centers, distribution centers, and retailers are optimized using a vehicle routing problem approach. A mixed-integer programming model is formulated, and a genetic algorithm-based metaheuristic approach is proposed. The BARON solver was initially used to solve two simplified test problems, with results compared to a self-designed genetic algorithm implemented in C#. After confirming the efficiency and effectiveness of our genetic algorithm (GA), the investigation is further extended to encompass five distinct problems, each comprising nine sub-problems. The GA demonstrates its power and adaptability by providing high-quality solutions efficiently within a reasonable computational time.


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