Optimal procurement strategy of fresh produce retailer under stochastic product qualification and market demand

Abstract

Consider an optimal procurement strategy for fresh produce, which is a type of perishable product. Due to the different quality provided by each manufacturer, the fresh produce qualification rates are dissimilar. Simultaneously, consumers demand is influenced by the freshness and price of products, as a result, the demand in the market is not fixed. In this scenario, how a particular retailer should develop an optimal procurement strategy will be a core issue in supply chain management. In order to address the above questions, the Bayesian approach is adopted to explore retailer optimal procurement strategies with uncertainty about product supply and market demand. Finally, simulation data are used to analyse the results of the proposed model and expected non-random model to illustrate the validity and feasibility of the proposed model.