Dynamic Decision-Making in Fresh Products Supply Chain With Strategic Consumers

Abstract

Fresh agricultural products constantly lose freshness during sales, and strategic consumers choose the optimal purchase timing according to the freshness and prices. In this paper, we introduce freshness-keeping effort to describe the retailer’s freshness-keeping work and provide a consumer utility function to describe strategic behavior. Additionally, we construct a dynamic decision-making model using the rational expectations equilibrium to improve the profits of each member. This study also designs a freshness-keeping cost-sharing and revenue-sharing contract to coordinate the supply chain. Finally, we verified the effectiveness of the model by numerical simulation. The results show that optimal order quantity and freshness-keeping effort with strategic consumers are lower than without strategic consumers. Second, prices during normal and discount periods are both positively correlated with valuation. In addition, the normal price is negatively correlated with order quantity and freshness-keeping effort, and the discount price is positively correlated with order quantity. The correlation between discount price and freshness-keeping effort has a critical value, and the discount price is positively correlated with freshness-keeping effort when below the critical effort, and negatively after exceeding the critical effort. Third, the combination contract can increase expected profits for both supplier and retailer and help the decentralized supply chain achieve the expected profits of the centralized supply chain.

Keywords

• Fresh agricultural products
• freshness-keeping effort
• strategic consumers
• dynamic decision-making
• rational expectations equilibrium
• supply chain coordination