Food Supply Chain Sustainability Strategy for Fresh Retailer and Multi-Output Random Fresh Suppliers after COVID-19

Abstract

Feeding people sustainably during the COVID-19 pandemic remains a challenge, as food productivity is declining and there is a risk of chain breakage at any time. To maintain the core function of supplying food to end consumers, a new framework must be developed to investigate the strategies for coordinating a new supply chain comprised of multiple suppliers with random output. Thus, in both decentralized and centralized systems, this paper constructs a supply chain model of a retailer procuring from multiple suppliers and characterizes each party’s optimal decisions. These results show that: (1) the optimal order quantity, profit of each part, and overall profit of the supply chain in the concentrated situation are better than those in the decentralized situation, and the transmission mechanism is slightly different from the classic newsboy model; (2) a supply chain coordination contract consisting of price discounts and compensation is designed, which can realize the coordination of a retailer and multiple suppliers with random yield in the endogenous price situation. These results imply that managers can develop sustainable food supply chains during uncertain times by ordering from these multi-suppliers with random yield. This paper adds to the literature on random yield assembly systems by taking into account that multiple suppliers have random component distributions.