Abstract
This paper develops a dynamic model in a one-supplier-one-retailer fresh agricultural product supply chain that experiences supply disruptions during the planning horizon. The optimal solutions in the centralized and decentralized supply chains are studied. It is found that the retailer’s optimal order quantity and the maximum total supply chain profit in the decentralized supply chain with wholesale price contract are less than that in the centralized supply chain. A two-part tariff contract is proposed to coordinate the decentralized supply chain with which the maximum profit can be achieved. It is found that the optimal wholesale price should be a decreasing piecewise function of the final output. To ensure that the supplier and the retailer both have incentives to accept the coordination contract, a lump-sum fee is offered. The interval of lump-sum fee is given leaving both the supplier and the retailer better off with the two-part tariff contract.
Highlights
IntroductionThe production of most agricultural products is affected by a lot of external factors, such as the weather changes, seeds quality, and culture methods, which are not in full control by the supply chain members
Agriculture plays a vital role in the world economy
This paper develops a dynamic model in a one-supplier-one-retailer fresh agricultural product supply chain that experiences supply disruptions during the planning horizon
Summary
The production of most agricultural products is affected by a lot of external factors, such as the weather changes, seeds quality, and culture methods, which are not in full control by the supply chain members. For the agricultural product producers, they lack the market information and are not certain of the final output when going into production. They are more blindfold to choose what to produce and how much to produce, especially in the uncertain environment. Oversupply and shortage of the agricultural product are quite popular in the agricultural product market, which reduce the profit of the supply chain and hurt the enthusiasms of the supply chain members. How to reduce the effects of the fluctuations and share the risks facing the supply chain members is an important topic in the supply chain management
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