Abstract:
Agricultural supply chain (ASC) plays a vital role for sustainability as it is the main source of food
supply. ASC encounters more sources of risk due to seasonality, perishability, and weather conditions,
which makes the global food security system complex. This paper develops an optimization model
for a perishable product supply chain to decide the optimal risk management strategy that maximizes
the decision maker’s expected profit under demand and price uncertainty. A base-case scenario is
considered to show the impact of risk management strategy on performance improvement. The
expected profit of the decision maker is obtained for different combination of strategies, and sensitivity
analysis is performed to show the impact of perishability on the percentage of improvement from the
base case scenario. The results show that backup supplier strategy is very effective during the yield
disruption, but it is not as effective during harvest disruption. Hence, a single approach is inadequate
to provide solution in all types of risk scenarios; thus, the combination of approaches is most effective.