Channel choice and coordination of fresh agricultural product supply chain

Abstract

By constructing a dual-channel fresh agricultural product (FAP) supply chain consisting of a retailer and a supplier, this paper considers the effect of fresh-keeping level on the freshness of perishable products and constructs a time-varying demand function based on freshness. The operating cost of the internet channel to the supplier has also been considered in the model. Optimal pricing strategy and profits of supply chain members under dual channels are investigated respectively in this paper. Comparing the optimal profit under traditional single-channel and dual-channel supply chain, we obtain the condition that the internet operating cost should satisfy. Given the situation where the supplier obtains profit while the retailer loses after the supplier introduced the internet channel, this paper proposes a revenue-sharing contract to make up for the loss of the retailer and achieves a win–win situation. Research shows that in the numerical analysis the supplier’s and the retailer’s profit can only be improved when the operating cost of the internet channel c0 and revenue-sharing ratio ψ are within a certain range. When ψ ≥ 0.4 and $ 0\le {c}_0\le \sqrt{\frac{2.34{\psi }^2+1.25\psi +7.39}{8.43{\psi }^3+4.62{\psi }^2+5.72\psi +9.05}}+8.64$, Pareto improvement will be attained on both sides in the supply chain.