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Chinese Journal of Management Science ›› 2018, Vol. 26 ›› Issue (2): 175-185.doi: 10.16381/j.cnki.issn1003-207x.2018.02.018

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Coordination and Optimization of Three-echelon Agricultural Product Supply Chain Considering Freshness-keeping Effort and Quantity/Quality Elasticity

MA Xue-li1, WANG Shu-yun1, JIN Hui1, BAI Qing-guo2   

  1. 1. Economics and Management School, Yantai University, Yantai 264005, China;
    2. School of Management, Qufu Normal Univerity, Rizhao 276826, China
  • Received:2016-10-29 Revised:2017-05-08 Online:2018-02-20 Published:2018-04-20

Abstract: Due to the seasonal characteristics of most fresh agricultural products, most farmer sprefer to preserve a certain quantity of the products in the third-party logistics providers(TPLP) to balance demand or to achieve added value. The three-echelon supply chain that is composed of suppliers, TPLP and retailers has been the main supply mode of seasonal supplied fresh agricultural products. However, slow-moving events of such products that result from inefficient supply chain coordination occur frequently in recent years. So the research on coordination mechanism of the three-echelon supply chain of fresh agricultural products is of great significance to promote the healthy development of the fresh agricultural industry.
In this paper, the coordination of a three-echelon supply chain consisting of famers, TPLP and retailers is considered.Both the quantity loss and quality loss are viewed as the endogenous variables of the freshness-keeping effort decided by TPLP. The farmers decide on the quantity of products to be preserved in TPLP and the wholesale price based on market demand, production cost and freshness-keeping cost. The retailerspurchase from TPLP and determine the selling price by taking into accountproduct freshness and wholesale price.
It is assumed that the three supply chain members are facing the common market and all information is shared through the supply chain, dynamic game models under both decentralized decision mode and centralized decision mode are established to study the coordination mechanism of the three-echelon supply chain.
By comparing the optimal decision model in decentralized and centralized system, reasons for supply chain profit loss and distortion of order quantity and selling price are analyzed. For the two transaction processes in the three-echelon supply chain system, through analysis of major influencing factors in the supply chain system, coordination contract based on cost and revenue sharing is designed.
Our analysis stresses three important results. First, it is found that the optimal freshness-keeping effort in the centralized system is the same with the effort in the decentralized system. Second, the major reason for slow-moving is the high freshness-keeping cost for that it will increase the product supply cost, especially for the product with higher quantity elasticity. So the coordination mechanism should focus on reducing product supply cost. The coordination can be ensured by cost and revenue sharing. Finally, the coordination effect of the incentive mechanism is mainly related to the price-elasticity.
Some computational studies are conducted to investigate the impacts of quantity and quality elasticity on the optimal decisions in both decentralized and centralized system, and the effect of revenue sharing coefficient on coordinated supply chain member's expected profit, as well as the impact of price-elasticity on coordination effect. The results indicate that the designed mechanism can make efficient coordination for the three-echelon fresh agricultural supply chain within the effective range of revenue sharing coefficient.
Our contribution lies in how to design appropriate mechanism to coordinate the three-echelon fresh agricultural supply chain, in a situation where both product quantity and quality depend on freshness-keeping effort and the market demand is affected by freshness, price and some random factors.The results of this paper can provide guidelines for the government to develop more efficient agricultural supply chain.

Key words: supply chain coordination, freshness-keeping effort, quantity elasticity, fresh agricultural product

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