Supply chain network design for deteriorating items with discount on transportation cost

Abstract. Distribution of deteriorating items is dierent from that of other items. This issue leads distributors to transport in lower volumes. On the other hand, one of the mechanisms that attract buyers to purchase items is discount; although a larger amount of order has a lower price for one item, it has a higher risk of deterioration. Despite the importance of the issue, previous researches on deteriorating items did not consider discount conditions in designing supply chain network. Hence, in this paper, balancing the cost of ordering and the cost of deterioration, with consideration of discount, through a new model is studied. The problem is solved for numerical examples with an improved metaheuristic method composed of Simulated Annealing (SA) and Genetic Algorithm (GA) and the results are reported. Furthermore, a heuristic method for small scale problems is represented and compared with the introduced algorithm to analyze performance of the method. Finally, results show a signicant dierence between the costs of the models (with discount and without it).