Analysis of Traceability Optimization and Shareholder’s Profit for Efficient Supply Chain Operation under Product Recall Crisis

Abstract

Product recall gains considerable importance in recent times; the reason may be the huge losses faced by manufacturers because of product recall issues. Furthermore, the revenue of the firm is immensely affected as a result of product recall, which may lead to serious outcomes. Huge recall cost (such as repairing or destroying the recalled products and cost of notification) occurs as a result of large recall. Therefore, in order to minimize the quantity and probability of recalls the traceability systems are widely used and considered as a necessary part of product safety strategies. However, from literature it is clear that manufacturers are still struggling to obtain the significant results. This study helps the managers to understand the importance of recall cost by analysing its impact on shareholders profit. Keeping in view the importance of problem, the paper proposed an integrated optimization model to minimize the expected loss to shareholders in recall crisis using batch dispersion methodology. The analysed results show that reduction in traceability level increases the expected shareholders losses while decreasing the operational costs. This will help managers to optimally set the production batch sizes in order to reduce the product recall impact.

Supply chain management in times of crisis: a systematic review

“…• Multi-Objective Optimisation Methods (Hale and Moberg 2005 ; Merz et al 2009 ; Benaïcha and Hadj-Alouane 2013 ; Memon et al 2015 ; Zhang et al 2019 ; Laguna-Salvadó et al 2019 ; Ghorashi et al 2020 ; Khalilpourazari et al 2020 ; Malmir and Zobel 2021 ; Mosallanezhad et al 2021 ; Wang and Hu 2021 )…”

28 years of traceability management: trends, bottlenecks and opportunities

“…In the 1994-2014 period, there only is one paper that develops a mathematical model, which introduces a detailed model to assess the economic impact of RFID (Bottani, 2009). For the 2015-2017 period, we find four papers using mathematical models (e.g., Memon, 2015;Faisal, 2016).…”

Quality and Operations Management in Food Supply Chains: A Literature Review

“…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 [111] 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.…”