Purchasing heuristic algorithm for minimizing cost related to by-size inventory in frozen shrimp industry

In the shrimp market, shrimp can be categorized into six sizes, which are 30, 35, 40, 50, 60 and 80 pieces per kilogram. One of the common methods to purchase fresh shrimps, in the frozen shrimp industries, is to buy the whole farm from contracted farmers. The various shrimp sizes are obtained by this purchasing method. Purchased shrimps, whose sizes are not required by the customers, will be carried to the next periods. They are called the by-size inventory. In Thailand, the by-size inventory holding cost is considered as a major cost in frozen shrimp industries. Therefore, a good decision in purchasing the shrimp farms from contracted farmers is necessary in order to avoid excessive by-size inventory. In this paper, a mathematical model and an algorithm based on the mathematical model is developed to assist the frozen shrimp industries in contracted farms purchasing process. The objective is to minimize cost related to by-size inventory. The effectiveness of the heuristic was evaluated by solving a set of test problems with various parameters. The results demonstrated that the heuristic is quite effective and practical in solving the problem.