Abstract
The reduction of fresh agricultural product volume loss throughout the supply chain system is of high importance due to their perishable nature and impact on society, the economy, and environment. In this paper, three models for two-stage pricing, coordination, and volume loss reduction of the supply chain where third-party logistics service providers and retailers act as a Stackelberg leader and a follower for fresh agricultural products are developed, taking into account both volume loss during transport and quality loss in retail in the presence of strategic consumers. The following results are drawn from the contract for sharing revenues and service costs: (1) The supply chain achieve coordination and the products are healthier for consumers; (2) the coordination leads to a reduction in the three types of volume losses simultaneously only if the lowest marginal costs of the supply chain occur under certain conditions; and (3) the increase in the service sensitivity coefficient, the increase in the freshness discount coefficient under certain conditions, the decrease in the consumer benefit discount coefficient under certain conditions, and the decrease in the price sensitivity coefficient lead to an increase in the profit of the supply chain and a reduction in the three types of volume losses.
Highlights
Fresh agricultural products normally include vegetables, fruits, livestock, poultry, seafood, eggs, milk, and meat [1] which are key to improving people’s quality of diet
The demand function is derived from the utility function and profit models the two-stage pricing, coordination, andand volume lossloss reduction of modelsare areestablished establishedtotoinvestigate investigate the two-stage pricing, coordination, volume reduction the supply chain, considering the characteristics of fresh agricultural products including the physical of the supply chain, considering the characteristics of fresh agricultural products including the volume loss duringloss transport quality and loss during the presence strategic consumers
According to the relationships between the lower bound of the smallest marginal cost of fresh agricultural products supply chain (FASC) and parameters in the model, the increase in the service sensitivity coefficient, the decrease in consumer utility discount coefficient if it is small, and the increase in the freshness discount coefficient if it is large will lead to the increase in the possibility of a reduction in the two types of volume losses when the supply chain achieves coordination
Summary
Fresh agricultural products normally include vegetables, fruits, livestock, poultry, seafood, eggs, milk, and meat [1] which are key to improving people’s quality of diet. Considering the above considerations, this paper will aim to answer the following three questions through the mathematical model with the equilibrium theory, Stackelberg game, and backward induction method: (1) Can the two-echelon supply chain where the TPLSP and retailer act as a Stackelberg leader and a follower for fresh agricultural products achieve coordination when both the volume loss during transport and quality loss during retail in the presence of strategic consumers be taken into account? The considerations undertaken in this article will fill the gap in the literature through the following these two aspects: (1) Both the volume loss during transport and the quality loss during retail of the fresh agricultural products and consumer strategic behavior are taken into account in the supply chain model and (2) three types of volume losses and their reductions are analyzed based on the mathematical model. All proofs are found in Appendix B and the decentralized model can be found in Appendix A
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