The Nutrition Supplier's Technical Service Level, Feed Transfer Pricing and Profit Distribution in the Pig Supply Chain

Abstract

Apart from nutritional suppliers provide hog feed, but also provides technical services to help the raising enterprise to improve the technical capacity and raising standards, thus improving breeding efficiency. And nutritional suppliers also obtain benefit for the breeding efficiency improved; share the increase of the whole supply chain profits. The supplier will make the select decision for the investment of technical service based on the maximization of whole supply chain profit, according to the relationship between technical service investment and pig survival rate. Then, the increasing profit that brought by the investment of technical service will be distributed between the nutrition supplier and porkers enterprise. When technical service cost is less than the optimal cost, the increased profit of supply chain due to increase technical service investment and improve the survival rate, are greater than the technical service investment cost. That means the whole supply chain's profit will be increased. And the increasing profit would be distributed between two nodes. While the service cost equals the optimal cost, profit of whole supply chain is maximum; And when service cost is much more than the optimal cost, profit of the whole supply chain began to decline, and reduced part would be shared by two nodes.