Optimizing Vendor-Buyer Inventory Model with Exponential Quality Degradation for Food Product Using Grey Wolf Optimizer

Abstract

Inventory is an essential factor in the supply chain. Inventory problems are increasingly complex for perishable products such as food. This study proposes a Single Vendor-Single Buyer (SVSB) model for food products by considering exponential quality degradation. The objective function of this problem is to maximize the Joint Total Profit (JTP) of the SVSB system. The frequency of ordering raw materials (m), the frequency of delivery of the finished product (n), and the time of the inventory cycle (T) were the three (3) decision variables introduced in the study. This study proposes the Grey Wolf Optimizer (GWO) algorithm as an optimization tool for SVSB problems. A case study was conducted on a food company in Indonesia. Sensitivity analysis on costs, revenue, and JTP was also presented. The results showed that raw materials' quality degradation level affected JTP. The results also suggested that the GWO algorithm performs better than the Genetic Algorithm (GA) to optimize the SVSB inventory model.