Quality and Operations Management in Food Supply Chains

Quantitative Models of Food Traceability and Food Recall

In this subsection, we discuss the quantitative models using the information of traceability, which aims to improve product safety and helps firms reach financial targets. Food safety crisis can happen at any stage of food supply chains. Food traceability systems can record product attributes, such as quality and safety parameters, which can be used to capture information about ingredients, processing, storage, dates (sell-by, use-by), and so on. When a food safety crisis occurs, the sold products should be recalled from the customer to mitigate the negative effects. Governments have realized the importance of food traceability and built food traceability system in many countries. For example, Hong et al. discussed the financial model for applying Radio Frequency Identification (RFID) technology to a food traceability system in Taiwan. In addition, food crisis can bring great loss to enterprises. The application of traceability systems helps avoid such loss by reducing the impacts of food crisis. Required for regulatory and/or commercial purposes, they have been widely used to resolve the issues of product recall and food safety.

The traceability systems not only improve social welfares, but also contribute to firms' financial benefits. Dupuy et al. studied an optimization problem for food products under food quality risks and traceability systems. Under the given information, using a dispersion strategy, the firms can reduce the quantity of the recalled products, thus minimizing their costs. Their research showed that the traceability systems help mitigate food risks to customers. Wang et al. studied an optimization problem considering food traceability in a multilevel supply chain to achieve desired product quality and minimizing the impact of product recall in an economic manner. They showed that utilizing traceability systems and traceability information contributes to the reduction of food quality risks. Wang et al. also developed an integrated optimization model in which the traceability factors are incorporated with operations factors to determine the production batch size and batch dispersion. Resende-Filho and Hurley studied the impacts of information asymmetry in a two-level supply chain with a supplier and a retailer implementing a traceability system. The retailer can offer payment to the supplier to induce its food safety effort. They found that traceability based batch dispersion can substitute for the retailer's payments. They also showed that mandatory implementation of the traceability system may not lead to higher food safety, because it increases the firms' costs.

Piramuthu et al. studied the recall problem in a three-level food network in which the products have contamination risks. They incorporated the long delay and the inaccuracy properties of the contamination source identification in the optimization models. Comba et al. proposed an optimization model to manage perishable bulk products under the use of traceability system. Although the implementation of food traceability systems helps reduce food safety risks in society, companies may hesitate to do so if the recall cost or the traceability system implementation cost is too high. For most companies, their first goal is to gain financial benefits. As such, managers have to balance the cost incurred by food quality risks and that of recall of products or the implementation of the traceability systems. Memon et al. proposed an integrated optimization model to minimize the expected loss to shareholders in recall crisis using batch dispersion methodology and taking into consideration recall costs. It is shown that higher traceability level decreases the stakeholders' losses due to recall but increases operational cost. Zhu demonstrated that significant investment cost acts as a major obstacle for the diffusion of traceability systems in the food industry. They studied the economic outcomes for the implementation of a RFID-enabled traceability system in a two-level perishable food supply chain. Considering customers' perceptions of food quality and safety when using the traceability system, they proposed a dynamic pricing scheme, which helps reduce waste and improve the seller's performance. Dai et al. also studied the pricing and tracking capacity decisions considering different levels of food tracking cost and recall cost. Results show that there always exists a unique tracking capability and retailing/wholesale price with closed-form solutions to optimize the overall supply chain profit.

In summary, the application of traceability system can help to optimize the recall strategies when food crisis happens, therefore enhancing food safety. In the quantitative operations management models, when considering food traceability and food recall, inventory planning strategies, transportation planning strategies, and marketing strategies will be changed. However, there is limited research on this area and more works can be done.