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Supply chain contracting coordination for fresh products with fresh-keeping effort

Supply chain contracting coordination for fresh products with fresh-keeping effort

Zheng, Qi, Ieromonachou, Petros ORCID: 0000-0002-5842-9585, Fan, Tijun and Zhou, Li ORCID: 0000-0001-7132-5935 (2017) Supply chain contracting coordination for fresh products with fresh-keeping effort. Industrial Management & Data Systems, 117 (3). pp. 538-559. ISSN 0263-5577 (doi:

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Purpose – Fresh product loss rates in supply chain operations are particularly high due to the nature of perishable products. This paper aims to maximize profit through the contract between retailer and supplier. The optimized prices for the retailer and the supplier, taking the fresh-keeping effort into consideration, are derived.

Design/methodology/approach – To address this issue, we consider a two-echelon supply chain consisting of a retailer and a supplier (i.e., wholesaler) for two scenarios: centralized and decentralized decision-making. We start from investigating the optimal decision in the centralized supply chain and then comparing the results with those of the decentralized decision. Meanwhile, a fresh-keeping cost-sharing contract and a fresh-keeping cost- and revenue-sharing contract are designed. Numerical examples are provided, and managerial insights are discussed at end.

Findings – The results show that (a) the centralized decision is more profitable than the decentralized decision; (b) a fresh product supply chain can only be coordinated through a fresh-keeping cost- and revenue-sharing contract; (c) the optimal retail price, wholesale price and fresh-keeping effort can all be achieved; (d) the profit of a fresh product supply chain is positively related to consumers’ sensitivity to freshness and negatively correlated with their sensitivity to price.

Originality/value – Few studies have considered fresh-keeping effort as a decision variable in the modelling of supply chain. In this paper, a mathematical model for the fresh-keeping effort and for price decisions in a supply chain is developed. In particular, fresh-keeping cost sharing contract and revenue-sharing contract are examined simultaneously in the study of the supply chain coordination problem.

Item Type: Article
Uncontrolled Keywords: Fresh product; Supply chain; Contract; Coordination; Fresh-keeping effort.
Subjects: H Social Sciences > HD Industries. Land use. Labor
Faculty / School / Research Centre / Research Group: Faculty of Business
Faculty of Business > Networks and Urban Systems Centre (NUSC) > Connected Cities Research Group
Faculty of Business > Department of Systems Management & Strategy
Last Modified: 22 Feb 2018 14:35

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