ARTICLE IN PRESS

Int. J. Production Economics 93–94 (2005) 345–356

www.elsevier.com/locate/dsw

Stability of perishable goods in cold logistic chains

Marija Bogataj, Ludvik Bogataj, Robert Vodopivec
Faculty of Economics, University of Ljubljana, Kardeljeva ploščad 17, 1000 Ljubljana, Slovenia

Abstract

We consider that production and logistics facilities in the supply chain are positioned between the origin and the
supply market or in a part of it. Any changes in time-distance or temperature in the chain could cause the net present
value of the activities and their added value in the supply chain to be perturbed. In reality the perturbations can be
robust. The natural question arises is to what are the effects of some perturbations in a supply chain, in its production
or distribution part, on the stability of perishable goods in such systems and what is the appropriate control which
keeps the product on the required level of quality and quantity at the final delivery. These analyses are especially
important to assure the stability of cold chains in the cold chains management (CCM). What conditions should be
fulfilled to assure that after such robust perturbations of parameters and especially time delays (lead times and some
other delays) the behaviour of the logistics chain would still be within the prescribed limits. The formulation obtained in
the time domain will be compared with the formulation in the frequency space introduced by Grubbström in his paper
‘‘On the Application of the Laplace Transform to Certain Economic Problems’’ (Manage. Sci. (7) (1967) 558) and with
the later studies of his school. Their model was extended by the authors to the complete logistic chain, where location —
and with it also the distance between the activity cells of logistic chain — play an important role.
r 2004 Elsevier B.V. All rights reserved.

Keywords: Stability; Logistic chain; Lead time; Input–output analysis; Laplace transforms; MRP; Robust perturbations; Cold chains;
Cold chains management; Perishable goods

1. Introduction to the global logistics management of cold chains

At the end of the past millennium supply networks management emerges as an important management
paradigm and is said to be one of the last unexplored frontiers of the management science (Baldiwala,
2001). In the global marketplace, getting the right goods at the right time at the right place is as important
as low costs. It is essential for enterprises to develop the visibility of flows in the network and to understand
management tools needed to supply network logistics. Visibility is especially important in cold chains and
other chains of perishable goods where control of changing the temperature in transportation or even in
Corresponding author. Tel.: +386-7-3461570; fax: +386-7-3461571
E-mail address: marija.bogataj@guest.arnes.si (M. Bogataj).

0925-5273/$ - see front matter r 2004 Elsevier B.V. All rights reserved.
doi:10.1016/j.ijpe.2004.06.032
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346 M. Bogataj et al. / Int. J. Production Economics 93–94 (2005) 345–356

production cells or control by adding the preservatives is needed to keep the quality and quantity of
product at the end of the supply chain on the required level.
What is the global cold chains management (CCM)? It is the process of planning, implementing and
controlling efficient, effective flow and storage of perishable goods, related services and information from
one or more points of origin to the points of production, distribution and consumptions in order to meet
customers’ requirements on a worldwide scale. It is the process of integrating the existing business activities,
including special activities for perishable goods conservation along the value chains, where more suppliers
of certain raw materials or more production cells of certain semi-products appear in order to create value
for the end user.
The global market of refrigerated products and prepared meals is increasing rapidly due to the main
drivers of globalization:

decreasing tariffs (WTO, GATT),

permanent improvement of transportation efficiency (the emergence of air travel, induced traffic on the
new highways, faster ocean crossings, etc.),

development of communication and information technology,

and development of cold chains techniques.
As the market for refrigerated products and prepared meals is increasing, regulations of supply chain
must be prescribed by public authorities to protect final customers from health hazards. The temperature
and other types of preservation control at each stage of the supply chain are essential to maintain the
prescribed quality of the product until it reaches final consumer. This quality is influenced by the perturbed
time delays in actions and by temperature disturbances. Europe and other developed countries have
established a set of regulations for temperature control and equipment performance at different steps of the
cold chain. Risk assessment is necessary and it requires permanent control of the products in the cold chain.
Temperature variations may result in the growth of different pathogen particles as micro-bacteria, and
other deteriorations. Their quantity has to be limited. Since temperature abuse in the cold chain can cause
microbial hazard and losses of product quality, temperature control is essential to keep the final consumer
safe. Many countries have established food safety regulations as:

product temperature regulation along the supply chain,

obligatory recording of air and product temperature in refrigerated vehicles, production cells and
loading-reloading places,

and standardized equipment confirmed by attesting.
As the regulations differ from country to country, European regulations and directives have been
harmonized for prescribed temperature of frozen products at most steps of the production and distribution
chain. The European Community directive EN 92/1 CEE has prescribed air temperature recording in
transportation, warehousing and retail display. We have ‘‘Agreement on the international carriage of
perishable foodstuffs and special equipment to be used for such carriage’’ (ATP) established in 1970, by
which contracting parties have to take the measures necessary to ensure that equipment, used for carriage
of perishable goods meets the technical standards described in the agreement. The standards prescribed by
ATP include limits in heat loss of products ðin W=m2 KÞ and the ratio between the refrigerating unit
capacity and the heat loss of the product. For display cabinets, standards have been adopted
internationally, but are not compulsory everywhere.
Up to consumption, the distribution chain of food products is made up of many different stages. Product
temperature, especially when containers of this chain are not the same from the very beginning, fluctuates much
more than when transportation is provided in the same container with cooling control on all the time. Product
temperature varies in each step, especially during loading and unloading outside air-conditioned warehouses
and can exceed the upper or lower limits, although such circumstances may last only a very short time.
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M. Bogataj et al. / Int. J. Production Economics 93–94 (2005) 345–356 347

Recently, the concept of ‘‘cold traceability’’ was introduced, which requires some tools and equipment
such as thermometers, temperature recorders, temperature indicators and time-temperature integrators
mostly for static approach to the quality control of perishable goods. This concept helps to trace different
groups of perishable goods like poultry and other meat, fish, fruits and vegetable, confectionery, ice cream
and other dairy products which are transported under different cooling requirements. The question arises,
till when and how the cargo handling can be improved in order to meet the final requirements? What should
be the conditions and restrictions of a dynamic system management so that the final consumer’s need for
healthy food will be met? Are the static limitations of the perturbations at each moment as good as dynamic
restrictions? To overview the chain flows and to achieve the optimal control in the procedures of cooling
and improvements, input–output approach studied by Grubbström especially in his papers Grubbström
(1967, 1996a, b, 1998), Grubbström and Bogataj (1998), is extended to the entire cold chain as is suggested
by Bogataj and Bogataj (2001) with additional evaluation of deterioration rate in the distance functions.
Here the level and uncertainty of demand, which is met by delivery service level b, is the subject of quality,
mill pricing and location (distance between two activity cells) as is presented in Bogataj (1994, 1995, 1996,
1998, 1999) and Girlich (1995). The results of cold chain management (CCM) are finally expressed and
valuated as the net present value (NPV) of the final delivery reduced by the costs of production,
distribution, additional cooling and deterioration of goods.

2. Deterioration of goods in a cooling system

Among the models which help evaluate the influence of transportation and production parameters and
their perturbations on the chain performances, especially on the net present value of the supply chain
operations, is extended material requirements planning (MRP) model which uses input–output approach in
production, distribution and/or recycling (reverse logistics) formalization of a supply chain. For a certain
time unit we can write
S ¼ ðI  HÞP  F : ð1Þ
Here we denote: inventory per time unit is S, net production per time unit is ðI  HÞP, gross production per
time unit is P, internal demand per time unit is HP, and delivery per time unit is F .
The demand D has to meet the delivery F with a certain service level (probability Prob ¼ 1  b).
If there is a sequence of activity cells in a logistic chain, the dimension of the space which describes this
production or distribution is equal to the number of activity cells in a chain.
In the global integrated supply network, the location of the activity cells influences storage and
distribution costs, especially the response time in control actions. Here demand is stochastic by nature and
disturbances appear at unexpected locations, at unexpected time and with unexpected magnitude.
How to evaluate the spatial interactions and the influences of location on the uncertainty of supply at two
sequential activity cells, of which the general stochastic consideration was given in Bogataj and Horvat
(1996), was described by Bogataj (1996, 1998, 1999) using some classical location theory approaches. The
previous suggestions as to how to analyse the perturbations of lead time are directly or indirectly given by
Grubbström (1967, 1996a, b, 1998), Grubbström and Bogataj (1998). Later, in Bogataj and Bogataj (2001),
this approach was used to study the entire global supply network. In such global supply networks, location
characteristics, described Girlich (1995) and Bogataj (1996, 1998, 1999), influence uncertain supply and
perturbations in lead time. These influences are considerable especially because of the increasing distances
between activity cells in the process of globalization. Perishable goods, isolated in one activity cell of the
supply network or in a pair of activity cells, have been studied in detail in Bogataj and Čibej (1994) and
Bogataj (1994). Some results of these studies are now extended into the global logistic chain which could
also include the distribution and reverse logistic part of the chain.
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In the case of perishable goods in our supply chain at any of n stages (k ¼ 1; 2; . . . ; n), the development of
the state of the system is described by a set of first-order linear differential-delay equations (DDE):
xk ðtÞ
d~
¼ Ak ~
xk ðtÞ þ Bk ~
xk ðt  tk Þ; k ¼ 1; 2; . . . ; n; ð2Þ
dt
with the initial condition
~
xk0 ðyÞ ¼ ~
jðyÞ; tk pyp0:
From the general theory of DDE we know that the state of the system in our study belongs to the state
space of continuous functions Cð½tk ; 0; <2 Þ. For details, see Hale (1977). In the supply chain considered
xk ð0Þ ¼ ~
here, the initial value of stage k, ~ xk0 , is equal to final value at stage k  1, ~
xk1 ðf Þ ¼ ~
xk1f ;
~
xk0 ðyÞ ¼ ~
xk1f ðyÞ; tk pyp0: ð3Þ
2
Here we have ~ xk ðtÞ 2 < , where x1;k ðtÞ, is quantity of good products at time t at stage k and x2;k presents
deteriorated quantity of products. The matrix Ak 2 Lð<2 ; <2 Þ describes the intensity of deterioration of
goods at stage k of production or distribution part of the supply chain. Here Lð<m ; <m Þ denotes the real
Banach space of all continuous linear maps: L : <m ! <m . The matrix Bk 2 Lð<2 ; <2 Þ presents the
conservation effect which is activated with the delay tk and depends on the state of the goods in the system.
Combining basic input–output Eqs. (1) developed for dynamic consideration of MRP in Grubbström
(1967, 1996a, b, 1998), Grubbström and Bogataj (1998), with Eqs. (2) which include all k, k ¼ 1; 2; . . . ; n, so
we can write
2_ 3 2 32 3 2 32 3 2 3
~
xp ðtÞ 0 0 0 : : 0 ~
xp ðtÞ ðI  HÞ 0 0 : : 0 PðtÞ F ðtÞ
6 7 6 76 7 6 76 7 6 7
6~ _ 7 6 76 x1 ðtÞ 7 6 0 0 : : 07 6 7 6 7
6 x1 ðtÞ 7 6 0 A1 0 : : 0 76 ~ 7 6 0 76 0 7 6 0 7
6 7 6 76 7 6 76 7 6 7
6~ _ 7 6 76 x2 ðtÞ 7 6 0 0 : : 07 6 7 6 7
6 x2 ðtÞ 7 6 0 0 A2 : : 0 76 ~ 7 6 0 76 0 7 6 0 7
6 7¼6 76 7þ6 76 76 7
6 : 7 6: : : : : 7 6 7 6 : : : : :7 6 7 6 7
6 7 6 : 76 : 7 6 : 76 0 7 6 0 7
6 7 6 76 7 6 76 7 6 7
6 : 7 6: : : : : 7 6 7 6 : : : : :7 6 7 6 7
4 5 4 : 54 : 5 4 : 54 0 5 4 0 5
x_ n ðtÞ
~ 0 0 0 : : An ~
xn ðtÞ 0 0 0 : : 0 0 0
2 32 3
0 0 0 : : 0 0
6 76 7
6 0 B1 0 : : 0 76 ~ 7
6 76 x1 ðt  t1 Þ 7
6 76 7
6 0 0 B2 : : 0 76 ~ 7
6 76 x2 ðt  t2 Þ 7
þ6 76 7: (4)
6: : : : : : 7 6 : 7
6 76 7
6 76 7
6: : : : : : 7 6 : 7
4 54 5
0 0 0 : : Bn ~
xn ðt  tn Þ
At any stage the total quantity of items is the sum of deteriorated quantity and good quantity of items

ð5Þ
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DDE (4) has the following compact presentation:

_
_ _ _ _ _ _ _


X ðtÞ ¼ A X ðtÞ þ ðI  H Þ PðtÞ þ BðtÞ X ðt; t1 ; t2 ; . . . ; tn Þ  F ðtÞ: ð4aÞ

Condition (5) has the following compact form:

_ _
G X ðtÞ ¼ 0; t 2 ½0; tf : ð5aÞ

DDE (4) has the initial condition

_ _
X 0 ðyÞ ¼ FðyÞ;  maxftk gpyp0: ð5bÞ
k

Also the sequential conditions

xk0 ðyÞ ¼ ~
~ xk1f ðyÞ; tk pyp0 ð5cÞ

have to be fulfilled.
Because the disturbances in temperature or in time delays of the system can appear at any stage k and can
influence on the deterioration rate matrix DAk , the supply chain needs to be additionally cooled or the
products have to be additionally treated, as it is described by the linear DDE (6). The additional results as a
consequence of additional treatment DBk usually appear with time delays of these actions Dtk for any k
2_ 3 2 32 3
~
xp ðtÞ 0 0 0 : : 0 ~
xp ðtÞ
6 7 6 76 7
6~_ 7 6 76 ~ 7
6 x1 ðtÞ 7 6 0 A1 þ DA1 0 : : 0 76 x1 ðtÞ 7
6 7 6 76 7
6~_ 7 6 A2 þ DA2 : : 76 ~ 7
6 x2 ðtÞ 7 6 0 0 0 76 x2 ðtÞ 7
6 7¼6 76 7
6 : 7 6: : : : : : 76 : 7
6 7 6 76 7
6 7 6 76 7
6 : 7 6: : : : : : 76 7
4 5 4 54 : 5
x_ n ðtÞ
~ 0 0 0 : : An þ DAn ~
xn ðtÞ
2 32 3 2 3
ðI  HÞ 0 0 : : 0 PðtÞ F ðtÞ
6 76 7 6 7
6 0 0 0 : : 07 6 7 6 7
6 76 0 7 6 0 7
6 76 7 6 7
6 0 0 0 : : 07 6 7 6 7
6 76 0 7 6 0 7
þ6 76 76 7
6 : : : : : :7 6 7 6 7
6 76 0 7 6 0 7
6 76 7 6 7
6 : : : : : :7 6 7 6 7
4 54 0 5 4 0 5
0 0 0 : : 0 0 0
2 32 3
0 0 0 : : 0 0
6 76 7
60 B1 þ DB1 : : 76 ~ 7
6 0 0 76 x1 ðt  t1 þ Dt1 Þ 7
6 76 7
60 B2 þ DB2 : : 76 ~ 7
6 0 0 76 x2 ðt  t2 þ Dt2 Þ 7
þ6 76 7: (6)
6: : : : : : 76 : 7
6 76 7
6 76 7
6: : : : : : 76 : 7
4 54 5
0 0 0 : : Bn þ DBn ~
xn ðt  tn þ Dtn Þ

By 0 in (4) and (6) we understand null matrices of appropriate dimensions.

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Linear DDE (6) can be written in condensed form as follows:

ð6aÞ

or

_
_ _ _ _ _





X ðtÞ ¼ ðA þ DAÞ X ðtÞ þ ðI  H Þ PðtÞ þ ðBðtÞ þ DBðtÞÞ X ðt; t1 ; t2 ; . . . tn Þ  F ðtÞ; ð6bÞ

where

ð7Þ
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In system (6) mass preservation condition (5a),

_ _
G X ðtÞ ¼ 0; t 2 ½0; tf ;

the initial condition (5b),

_ _
X 0 ðyÞ ¼ FðyÞ;  maxftk gpyp0;
k

xk0 ðyÞ ¼ ~
and also the sequential conditions (5c): ~ xk1f ðyÞ, k ¼ 1; 2; . . . ; n,

tk pyp0;
have to be fulfilled.

3. Stabilization of product deterioration processes by cooling

_


The feedback control ðB þ DBÞ X ðt; t1; t2 ; . . . ; tn Þ is needed as additional cooling so that one of two
optimization criterions (a) minimal costs or (b) maximal annuity stream would be fulfilled.
(a) The total cost of additional cooling and the cost of deteriorated portion of cargo, described in (8)
should be minimal. In criterion function J, these costs appear often in quadratic form, where the first
part presents the costs of cooling all over the time, described by matrix C of cooling costs on all stages
of logistic chain, through matrix W, which could be identity. The second part of criterion function
requires that the shortage of good part of total inventory at the point of demand (usually the final stage
of supply chain) is penalized. Also the total inventory, which exceeds the total demand, causes costs of
additional deterioration and additional storage expenses, which also has to be penalized. This is
described
_ by quadratic form OT V O. Here b presents the probability of shortage of goods
(Prob F ðt; bÞoDðtÞ ¼ bÞ and
Z tf _ T _ _ _ _ _


J¼ S ðtÞðB þ DBÞT C T WCðB þ DBÞ S ðtÞ dt þ ðS ðtÞ  F ðt; bÞÞT OT V OðSðtÞ  F ðt; bÞÞ dt ; ð8Þ
0

_ _
_
SðtÞ ¼ X ðtÞ: ð9Þ
_
We are looking for such a control U ðtÞ
_ _


~ðt;~
U ðtÞ ¼ ðB þ DBÞ X tÞ ð10Þ
T
that J would be minimal. Here O V O is the weight matrix sometimes having only one nonzero element
on the diagonal at 3n1 position. The rate OT V O=C T WC presents the degree of stabilization of
perishable goods.
For the solution of this problem, see Manitius (1974).
or
(b) In the case that we consider the net present value of revenues achieved when the good part of products
is sold, reduced for the costs of cooling and other costs in the supply chain, distributed on the time
horizon, when interest rate of costs and revenues is substantial, the approach in frequency space
suggested in general by Grubbström (1967, 1996a, b,1998), Grubbström and Bogataj (1998) gives more
straightforward results.
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Let us write Eq. (6b) in frequency space using the following Laplace transform expressions:
Z 1
_ ~
_ _
dfX ðtÞg ¼ X ðsÞ ¼ est X ðtÞ dt; ð11Þ
0

d _ ~
_ _
d X ðtÞ ¼ sX ðsÞ  X ð0Þ; ð12Þ
dt

Z t_ ~
_
d SðaÞ da ¼ SðsÞ=s; ð13Þ
0

Z t_
~
_
_ ~
_ ~
_ S ðsÞ
tÞg ¼ t ðsÞ  d
dfX ðt;~ SðaÞ da ¼ t ðsÞ : ð14Þ
0 s

Eq. (4) in this space has the following:

_ " ~ #1 _
__
~
_ AþB t ~
_ ~
_


SðsÞ ¼ I   X ð0Þ þ ðI  H ÞPðsÞ  F ðsÞ: ð15Þ

s

Using Laplace transform of extended Eq. (6) in the same way as transform of basic Eq. (4), the
perturbations can be studied in frequency space, where the influence of delays can be presented explicitly:

1
~
_ _ 1 1 ~ _~ _ ~
_ ~
_


_
SðsÞ ¼ I  ðA þ DAÞ  ðB þ DBÞ t  Dt  ½X ð0Þ þ ðI  H ÞPðsÞ  F ðsÞ: ð16Þ
s s
_ _ _~ _ ~
_ _
For the case of constant P and F (PðsÞ ¼ P =s and F ðsÞ ¼ F =s) in all production and distribution activity
cells, we can write

1
~
_ _ ~ _~ _


_
SðsÞ ¼ s I ðA þ DAÞ  ðB þ DBÞ t  Dt  ½s  X ð0Þ þ ðI  H ÞP  F : ð16aÞ

The appropriate criterion function could be annuity stream or the net present value of the system described
by (16):
Z     
1 _ _ _ _ _  _ _   _ _


st 
J ¼ NPV ¼ e C A A þ DA  C B B þ DB S ðtÞ  C F M S ðtÞ  Dðt; bÞ þ C F Dðt; bÞ dt;
0 

ð17Þ
_ _ _ _
C A is the vector
_ of deterioration costs, C B is the vector of cooling costs, C F is delivery revenue, C F is cost of
shortage and M is the matrix having 1 in the rows 3k  1 and column 3k  1 and 0 otherwise, where k are
the stages where demand appears. In the case where demand appears only at the end of the supply chain, 1
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M. Bogataj et al. / Int. J. Production Economics 93–94 (2005) 345–356 353

is placed only at ð3n  1; 3n  1Þ.

ð18Þ

~
_
and Dt is diagonal matrix, similar to (18), having esDti instead of esti like in (18), we can write

~
_
Dt ¼ diagð1; 1; . . . ; 1; esDt1 ; esDt1 ; esDt2 ; esDt2 ; . . . ; esDtn ; esDtn1 Þ: ð18aÞ

The control has to be determined which appears with a certain delay, so that deterioration process will stay
stable. From (16) at a certain value of (17) it follows:

~
_ ~
_
~ _~
S ðsÞ _~ S ðsÞ _ ~
_ ~
_


_
ðB þ DBÞ t Dt ¼ S ðsÞ  ððA þ DAÞ  X ð0Þ  ðI  H ÞPðsÞ þ F ðsÞ: ð19Þ
s s

The optimization problem (17) under constrains (19)

_ can be
_ solved,
_ using one of the known mathematical
programming approaches. In case of the constant PðtÞ ¼ P and F ðtÞ ¼ F , parametric linear programming
approach gives us the proper evaluation of perturbations and the control needed.

4. Numerical example

In our very simple numerical example we assume that we are producing and distributing a certain
perishable product PP in the supply chain of 3 stages.
_ At the initial moment, we already have distributed
goods at all stages as is presented by the vector X ð0Þ. It means that we have 1125 boxes at the first activity
cell (production, packaging, waiting in warehouse), 675 containers on the road, which is considered as the
second activity cell, and 30 000 palettes at the third stage (reloading unit). On the time horizon (t, 0) there
is no deterioration of initial goods. The goods at first stage are packaged in boxes, where in case of
prescribed temperature Temp1 deterioration rate is q1 ¼ 0:003. The goods need to be at first stage for 1.5
time units TU. On each additional day we are importing, in the first activity cell, additional 7500 boxes of
PP. After finishing the activities there, they are loaded in the containers of 100 boxes intensly 75 trucks
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354 M. Bogataj et al. / Int. J. Production Economics 93–94 (2005) 345–356

(containers) per TU. The trucks are immediately sent to the next activity cell—Warehouse 2 (W2). They
need 9 hours to reach W2. The temperature here is changed to Temp2. Deterioration rate here is q2 ¼ 0:005
per TU, if there is no additional cooling (control). At the final place, the containers are reloaded and stored
in the warehouse W2, packed in the palettes of 10 boxes. The palettes are waiting for customers. 750K1
palettes per TU are delivered from the currant arrivals and others from the reserves, if exist. Reloading and
waiting last for 4 hours with a constant deterioration rate. Deterioration rate in this warehouse (W2) at a
prescribed temperature Temp3 is q3 ¼ 0:003 per TU. PP has quality control at the next loading (final
delivery F).
The purchasing price at the first stage (input to the first activity cell) is 1000 EUR per box. Selling price is
33 000 EUR per palette of goods PP. Expected cost of shortage of one palette is 2500 EUR. The quantity
which exceeds the normal demand, D ¼ 1000, is sold for 500 EUR per palette.
The additional cooling can be started only by time delay (1, 3, 2) TU sequentially (see ~ tÞ at each activity
cell. Let us assume that we have already decided additional cooling which retards deterioration by the rate
0.002, 0.004 and 0.002, which costs C B ¼ ð1; 100; 50Þ per unit of PP per unit of cooling rate,
respectively. Let us study how the perturbations of cooling, being of different volume DB which costs
additionally (1, 100, 50) per unit of PP per cooling rate, influence NPV! Let us note that for the sake of
simplicity, here the supply chain is very simple; no production of different inputs any particular stage exists,
there are no feedback flows or other properties which would make the matrix H more or less sparse. If the
daily s ¼ ðinterest þ insuranceÞrate ¼ 0:1 our vectors and matrices are the following:

DA ¼ 0;
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Table 1
Costs in a numerical example of the supply chain

Stage 3 2 1 3 Good part Shortage Sale NPV

Purchasing costs 0 0 1000 3E+07

Packaging, loading, 440625
transportation and other
activity costs 5 200 10
Additional cooling costs 1 100 50 Variable, approximately 2E+06
Delivery revenue (costs) 0 0 0 33000 2500 500 Variable
Total costs per unit 6 300 1060 33000 2500 500 Variable

Table 2
The revenue at the final stage and net present value of total supply chain B=103 (2.1 4.1 2.1)

DB B þ DB ¼ 0 0.0001 0.00001 0.000001 0.0000001

Net final revenue 943962 1.8E+07 3.3E+07 3.3E+07 3.7E+07
NPV 3E+07 1E+07 990750 990750 4734279
DB 0.0000000 0.00010 0.00100 0.00515 0.005155
Net final revenue 3.7E+07 3.7E+07 3.7E+07 3.3E+07 1.8E+07
NPV 4734279 4734273 4733975 990750 1E+07

2 3 2 3 2 3 2 3
1:5 1125 750 0
6 9 7 6 675 7 6 75 7 607
6 7 6 7 6 7 6 7
6 7 6 7 6 7 6 7
6 4 7 6 30 000 7 6 7500 7 607
6 7 6 7 6 7 6 7
6 7 6 7 6 7 6 7
6 1:5 7 6 1125 7 6 K 1  750 7 617
6 7 _ 6 7 6 7 6 7
t¼6 7
6 1:5 7; X ¼ ð0Þ6
6 0 7;
7 F ðsÞ ¼ 1=s6
6 ð1  K 1 Þ  750 7;
7 t¼6
~ 7
6 1 7:
6 7 6 7 6 7 6 7
6 9 7 6 675 7 6 K 2  75 7 637
6 7 6 7 6 7 6 7
6 9 7 6 0 7 6 ð1  K 2 Þ  75 7 637
6 7 6 7 6 7 6 7
6 7 6 7 6 7 6 7
4 4 5 4 30 000 5 4 K 3  7500 5 425
4 0 ð1  K 3 Þ  7500 2

If we have the costs as described in Table 1, the perturbation in cooling with retarded actions, as described
above, gives the final revenue for good PP (ordinary price and sales), reduced for the costs of shortage, as
presented in Table 2.

5. Conclusion

The cold chains management requires very careful temperature control and quick reactions when
perturbations appear in temperature or time delays occur. In our example it is presented how sensitive such
a chain can be. Visibility and proper control is needed. We are able to conclude that the analysis in the
frequency space can be straight forward, more than the analysis in the time domain. Using input–output
analysis, Laplace transforms and MRP approach, the problem can be transferred to LP parametric
problem which enables a clear presentation of the results of actions against perturbations, that can appear
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356 M. Bogataj et al. / Int. J. Production Economics 93–94 (2005) 345–356

on the different stages of a cold chain. The same approach, which was presented here for evaluation of the
retarded changes in temperature, can be used also in the evaluation of the actions against the perturbations
of lead times.

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