An integrated production planning and inventory management problem for a perishable product: optimization and Monte Carlo simulation as a tool for planning in scenarios with uncertain demands

This paper addresses a novel problem inspired by a practical situation faced by a Brazilian dairy company, which presents the integration of production and a two-level storage inventory control. In the supply chain (SC) analyzed, multiple production plants, warehouses, and distribution centers are considered. The problem also involves a set of constraints related to logistical capabilities and conditions of material flow throughout the SC. We developed a mathematical model and a Monte Carlo Simulation routine that aims to assist managers in establishing a production and inventory management plan for a perishable product, considering a stochastic and non-stationary demand. A numerical illustration of the results obtained by the mathematical model and a case study are carried out on the consideration of a First-Expired, First-Out inventory management policy. Results demonstrate that the proposed method allows the analysis of safety stock and the achievement of desired service levels while promoting a reduced rate of food waste over the considered planning horizon.