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1、 Modelling and analysis of inventory replenishment for perishable agricultural products with buyerseller collaborationIn this article, we study the inventory replenishment model for perishable agricultural products in a simple two-level supply chain. Collaborative forecasting is introduced into the
2、inventory replenishment decisions to avoid overstocking and understocking of agricultural products, and to maximise profits. We analyse the model with ordering cost, holding cost, shortage cost, deterioration cost and opportunity lost cost of perishable agricultural products. Extensive numerical ana
3、lysis is carried out to study the performance of the inventory policy. The optimal replenishment policy that minimises the total cost can be obtained from the model. It has demonstrated that the supply chain cost decreases with supplier and retailers collaborative forecasting.Keywords: perishable; a
4、gricultural; products; inventory; replenishment; collaborative; forecasting The perishable agricultural products industry has been under pressure regarding the improvement of food safety,the implementation of efficient risk management and rapid response capabilities, and the management of quality fr
5、om farm to fork. Since regulation 178/2002 of the European Parliament, and of the Council, on general food law came into force in 2005,traceability has become an essential business function for the food industry to consistently supply perishable agricultural products with quality and safety assuranc
6、e. Perishable agricultural products traceability is defined as the ability to trace and follow perishable agricultural products through all stages of production, processing and distribution (European Commission 2002).Perishable agricultural products products are often tracked and traced by manufactu
7、ring batches or logistic units,instead of individual product items (Jansen-Crullers et al. 2003). Batch numbers assigned at the start of the manufacturing processes accompany products as identifications throughout a supply chain. If a perishable agricultural products safety problem comes from a raw
8、material batch,all the finished products containing this raw material have to be identified and recalled.Integration into global markets offers the potential for more rapid growth and poverty reduction for poorer countries. However, market barriers within advanced economies to agricultural imports h
9、ave made it harder for developing countries to take full advantage of this opportunity. This article examines the impact of increasing demands for food safety and quality by European food retailers, and how the fundamental structure and culture of supplier organizations required by European retail c
10、hains are a major entry barrier for developing.Mediterranean fresh produce exporting countries, and for developing countries in general. The long-term solution for such countries to sustain an international demand for their products lies in structural, strategic and procedural initiatives that build
11、 up the trust and confidence of importers/retailers in the quality and safety assurance mechanisms for their produce.Market failure to deliver the level of safety to meet public health requirements and consumer demands constitutes economic grounds for public policy intervention (Unevenness and Jense
12、n, 1999). The lack, or high cost, of information, and the resulting consequences for public health are the fundamental justifications for public intervention to improve food safety. However, allocating food chain safety responsibilities from farm to table has created a new paradigm for stakeholder r
13、elationships characterized by complex interactions between public and private modes of regulation. The increasing globalization of food production and consumption make it difficult for national governments to exert comprehensive controls over the entire supply chain, and to identify the roots of qua
14、lity problems in foreign countries, or end of pipe management (Spiller, 2002). The resulting shift of responsibility towards the private sector has created a more complex and demanding policy space involving public and private sector incentives and controls. The interaction between self-regulation a
15、nd public regulation could provide a superior outcome, as industry and firms are more knowledgeable regarding product quality, and public regulation can generate reputation-based incentives to monitor quality, in the form of public exposure. However, increasing demands for food safety by developed c
16、ountries have raised concerns about likely food regulatory impacts on international trade, particularly in the case of developing countries (Trotski et al., 2001; Henson and Loader, 2001;Henson et al., 2000; Unevenness, 2000). It is recognised that developing countries are likely to have difficultie
17、s in meeting requirements associated with the implementation of high level sanitary or phytosanitary measures which come in connection with technical regulations, standards and conformity tests (IMF/World Bank, 2002; Garcia Martinez et al., 2002; Garcia Martinez and Poole, 2004; Wilson and Abiosis,
18、2003). As the commercial and institutional infrastructure develops, there is the risk that new regulatory barriers will be erected. This is of particular concernfor developing countries, where existing technical and institutional capacity to control and ensure compliance may not allow for the adjust
19、ments needed to meet new requirements.Most of the current debate has focused on the impact of public national and supranational (e.g. European Union) regulatory demands on market access for developing countries (see for example, Reardon et al., 1999; Busch et al., 2000;Weather spoon and Reardon, 200
20、3; Unevenness, 2000). The critical focus now needs to shift from such public regulatory standards, or Tats (technical barriers to trade), towards the increasing importance of food safety regulations imposed over and above public standards by private sector (commercial) firms, and their potential imp
21、act on agricultural and food product exports from developing countries. Opportunities and threats both arise from the growth of such private standards,which can be termed commercial barriers to trade。Unsurprisingly, the safety of food products has been a topic of debate for centuries. The first know
22、n law pertaining to the purity of food products, known as the “German Beer Purity Law” or Reinfestation,dates as far back as 1516 (Dornbusch, 1997). Today we have a myriad of laws, regulations, standards, processes, tools and technologies intended to ensure food safety. Nevertheless, food safety sca
23、ndals still occur on an all too regular basis. Table 1 presents some high profile food safety incidents that have occurred in several countries.From a safety perspective, food supply chains have a number of vulnerabilities (Whipple et al., 2009). First, they deal with natural products, many of which
24、 are perishable and could become harmful to consumers if not managed in a timely and safe manner (Akkerman et al., 2010). Secondly, food supply chains tend to be long, global and highly interconnected, leading to greater risk exposure (Henson and Reardon, 2005; Roth et al., 2008; Triene kens and Zur
25、icher, 2008; Whipple et al., 2009). Third, food and beverage products are at risk of intentional or unintentional adulteration and could even be the target of terrorist threats (Wei n and Lou, 2005;Whipple et al., 2009). According to Harl (2002), among seven general areas of vulnerability to terrori
26、sm in the US, five are related to the food supply chain. Careful management across the entire supply chain is necessary to ensure that-products reaching the final consumer are safe to eat and drink.Research by Voss et al. (2009) explores the tradeoffs among price, delivery, quality and safety in sel
27、ecting suppliers in the food supply chains of the U.S. Their research concludes that, in general,safety considerations tend to be less important in selecting suppliers when compared to quality, delivery and price. They argue that this lower priority could be a factor behind the frequency of food saf
28、ety incidents. However, their results also indicate that safety is more important under certain circumstances, particularly when products are sourced from abroad. Failures in food safety can have serious negative consequences not only for consumers, but also for the companies involved. The worst cas
29、e scenario occurs when incidents lead to deaths or illness (Trienekens and Zuurbier,2008). According to Thomsen and McKenzie (2001) millions of people around the world become ill every year as a result of unsafe foods. It has been estimated that in the U.S. alone, foodborne pathogens account for 76
30、million illnesses and 5000 deaths (Mead et al., 1999). Thomsen and McKenzie (2001) argue that human error and the limitations of food safety technology mean that,from time to time, consumers will face food safety risks. High profile incidents such as the Salmonella outbreak caused by peanut butter p
31、aste sold by the Peanut Corporation of America in 2008(Layton and Miroff, 2009), or the adulteration of powdered milk with melamine in China in the same year (Spencer, 2009), have made the headlines due to their scale and severity. In both cases the consequences for those involved have been serious.
32、 The Peanut Corporation of America filed for bankruptcy in February 2009 (Layton and Miroff, 2009). In the Chinese case, Sanlu, the company responsible,has been closed down, the general manager and a number of company officials are in jail, and two have been sentenced to death (Spencer, 2009). Most
33、food safety incidents do not lead to death or illness, and in many cases products can be recalled before they reach the consumer. However, recalls can be complex and costly (Thomsen and McKenzie, 2001; Whipple et al., 2009), they can damage a firms reputation (Hornibrook et al., 2005; Thomsen and Mc
34、Kenzie, 2001;Whipple et al., 2009), and ultimately affect the consumers perception of an entire product category (Henson and Reardon, 2005;Trienekens and Zuurbier, 2008). All of these factors can contribute to shareholder losses. A study by Thomsen and McKenzie (2001) uses event analysis to evaluate
35、 the impact of product recalls on shareholder loses. They conclude that in cases where the product recalled poses a serious threat to consumers health, there is a loss in shareholder wealth of between 1.5% and 3%. However, they also conclude that recalls involving less serious infringements have no
36、negative impact on shareholder wealth. One of the important characteristics of agricultural products, such as eggs, milk, dairy products and vegetables is their biotic energy. The period of time for which their quality remains acceptable is very short,which means they are easily perishable in the co
37、urse of transportation and storage. However, we human beings rely on the good condition of agricultural products to stay alive and healthy. Therefore, it is crucial that the inventory of agricultural products is managed properly. On the one hand, the price of agricultural products is time-sensitive,
38、 implying that the price decreases dramatically as the end of the products life approaches. On the other hand, a shortage of agricultural products while there is demand for the product may result in significant loss of revenue. Establishing an efficient and effective inventory system to obtain the r
39、ight quantity of products of the right quality, from the right source,and to have the products delivered to the right place at the right price can have a positive influence on a companys profitability and competitive advantage. However, achieving this is constrained by issues ofcompetition, profitab
40、ility, product harvest and other relevant conditions.As a major input to the agricultural inventory system, inventory replenishment is a major criterion for guaranteeing sales and reducing costs.Replenishment cost and inventory cost can be regarded as the two most important cost items, which account
41、 for the majority of the overall cost. A reduction in these two costs can lead to a significant decrease in operational cost. The value of agricultural products drops with passage of time. Therefore, while taking the inventory cost of agricultural products into account, one has to consider not only
42、the inventory holding cost but also the inventory depreciation cost. However,conventional inventory systems encounter problems, such as difficulty in sharing information,empiricism in purchase decision making, unstable cooperative relationships between purchasers and suppliers, the impossibility of
43、tracking purchases, and the waste arising from the decay of agricultural products because of over-purchasing. These factors result in slow reactions to client demand, poor adjustment to demand fluctuation, probable overstocking or product shortages and so on. These factors, in turn, have serious eff
44、ects on profits from sale of agricultural products. Moreover, under certain circumstances, inventory depreciation cost is a key factor in determining operational costs. However, inventory costs can be controlled by appropriate replenishment decisions. In other words, replenishment is the core of agr
45、icultural inventory control.Collaborative planning, forecasting and replenishment(CPFR) is proving to be one of the most successful mechanisms in transforming relationships between partners into a win-win situation where customer satisfaction, costs and revenues can all improve simultaneously. It bu
46、i lds upon efficientconsumer response (ECR) principles including vendor managed inventory (VMI), jointly managed inventory(JMI), continuous repl enishment (CRP)and category management. The global commerce initiative (GCI),the global scorecard,categorises CPFR in its integrator group of initiatives.
47、However, owing to many unique characteristics of agricul tural products, such as their biological, seasonal,unstable and peris hable nature, the CPFR process needs to be improved to reflect these charact eristics when it is applied to agricultural product purchasing management. On acco unt of perish
48、ability issues,agricultural industry buyers tend to make frequent purchases of small quantities of a product. In additio n,critical issues, such as consistency in delivery and quality are extr emely variable. Considering the frequent and uncertain distrib ution of agricultural produc ts,collaborativ
49、e transport management (CTM) is appl ied to the purchasing process and distributi on forecasting is also added in order to assign distribution resources effectively. Given the quick response (QR) required in agricultural product purchasing, supply and demand forecasts are to be made simultaneously by upstream and downstream enterprises; only then a collaborative forecast will be reached, which will shorten the overall forecasting time adequately. Du, Leung, Zhang, and Lai (2009) developed a procurement model for agricul tural
