Supply chain coordination for perishable products under “Minimum Life on Receipt” (MLOR) agreements

Zoom Research Seminar

Past event — 16 December 2020

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Navid Mohamadi

PhD Candidate

Kühne Logistics University - KLU

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We consider a supply chain of one retailer and one supplier, who work with limited shelf life products, specifically groceries. On one hand, the retailer requires the supplier to only send products with remaining shelf life of not lower than a certain threshold known as "Minimum Life on Receipt" (MLOR). On the other hand, the supplier faces a positive production lead time, meaning the production decision is made before the realization of the retailer's order. Firstly, we design coordination contracts where the retailer is a Stackelberg leader and offers a contract as a take-it-or-leave-it proposition to the supplier.  The supplier only accepts the contract if his expected profit exceeds his reservation profit. We show that coordination is possible when the supply chain is either retailer- or supplier-operated. For the supplier-operated supply chain, coordination is only possible through a special two-part tariff contract, while for the retailer-operated supply chain the coordination might be achievable via different contract settings but there is no guarantee that the supplier reaches his reservation profit. Secondly, we do an analytical study and also bring a numerical example to analyze the effect of the MLOR agreement on the supply chain performance (profit and waste) when having a pure either retailer- or supplier-operated supply chain is not practically possible. We show by reducing the wholesale price and the MLOR level simultaneously, the profit and efficiency of the whole supply chain increases, while the waste reduces significantly.


Navid is a Ph.D. candidate at the Kühne Logistics University since 2018 and is supervised by Prof. Sandra Transchel (KLU) and Prof. Jan Fransoo (Tilburg University). His Ph.D. is in the area of operations and supply chain management focusing on grocery retail operations. He is mainly interested in food waste reduction and inventory management of perishable products. Before joining the Ph.D. program at the KLU, Navid received an M.Sc. in Industrial Engineering from the Amirkabir University of Technology (Iran)  and a B.Sc. in the same field from Isfahan University of Technology (Iran). His master thesis was about developing a stochastic optimization model for a closed-loop supply chain with consideration of financial and logistical risks. Furthermore, he gained more than 3 years of practical experience in the field of supply chain management in consultancy and manufacturing companies.


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Bärbel Wegener

Assistant Resident Faculty