SUPPLY CHAIN MANAGEMENT OF PERISHABLE ITEMS: 
CHANNEL DYNAMICS AND INTEGRATED DECISION MAKING 
Narasimha Kamath B. 
91¿´Æ¬Íø, 2005 
Supervisor: Subir Bhattacharya 
ABSTRACT 
Managing perishable items pose a significant challenge in the supply chain environment. Food 
stuffs, dairy products, green vegetables, fruits are all items of daily human consumption. These 
perishable items have a finite usable lifetime, and pass many hands during its movement from 
source to destination. The study of the supply chain of perishable products is particularly 
important because they account for more than 50% of supermarket sales, and the potential for 
extra profit from managing these items has been estimated at 15%. This thesis evaluates the 
channel dynamics and builds decision making models for supply chain of perishable items. 
To gain a primary understanding of the perishable item supply chain, the bakery supply chain of 
the ‘Monginis’ brand is studied. This is provided in the form of a case, the analysis of which is 
also provided. A framework for classification of the supply chain management (SCM) problems 
in literature is established. Theoretically this work can be seen as an amalgamation of two 
complementary fields, SCM and perishable inventory. On account of high complexity and 
dynamic environment, chain dynamics are investigated through experiments, macro aspects (long 
term decisions) are evaluated using system dynamics models and micro structures (short term 
decisions) are optimized using mathematical models. Coordinated decision making is shown to be 
cost effective vis-à-vis individualistic views. 
The holistic supply chain is modeled using system dynamics formalism, specifying the dominant 
cycles of spoilage loop that drive the chain dynamics. The information feedback view of the 
system is used to identify and modify the loops yielding better capacity augmentation decisions in 
short lifecycle products. This thesis demonstrates the presence of bullwhip effect for perishable 
item supply chain as well, and shows that it has lesser amplification and stabilizes faster when 
compared with non-perishable item. ANOVA results show a significant difference in performance 
metrics under various demand patterns and, to a certain extent, with the item type. An 
experimental method in the form of “Cake Game” is used to report the macrodynamics arising 
from the microstructure in a common managerial context.