Optimization and Coordination of the Fresh Agricultural Product Supply Chain Considering the Freshness-Keeping Effort and Information Sharing

Abstract

To solve freshness-keeping problems and analyse a retailer’s information sharing strategies in the fresh agricultural product supply chain (FAPSC), often confronted with challenges in keeping agri-products fresh in an uncertain market, we study an FAPSC via a decentralized mode in which the supplier or retailer exerts the freshness-keeping effort while the retailer decides its information sharing strategies regarding private demand forecasting. We consider a contract coordination mode including three incentive contracts, cost-sharing (cs), revenue-sharing (re) and revenue-and-cost-sharing (rc), to facilitate supply chain coordination. The results show that, as opposed to the case where the supplier takes on the freshness-keeping effort, the optimal freshness-keeping effort level, wholesale price and retail price are not only affected by the retailer’s information sharing strategy but also the freshness-keeping efficiency as the retailer exerts the freshness-keeping effort. Regarding the information sharing strategy, when the freshness-keeping effort is undertaken by the retailer, sharing information sometimes benefits the supplier; however, information sharing is never preferable for the retailer. Consequently, it is necessary to explore the supply chain coordination mode via effective incentive contracts which can improve the supplier and retailer’s profit. We also numerically analyze the effects of freshness-keeping efficiency on equilibrium decisions and expected profits in the decentralized mode, and the effects of the three contract parameters on the expected profits in equilibrium in the coordination mode.