4.7 Article

A study on contractual agreements in supply chains of agricultural produce

期刊

INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH
卷 57, 期 11, 页码 3766-3783

出版社

TAYLOR & FRANCIS LTD
DOI: 10.1080/00207543.2019.1566658

关键词

supply chain management; supply chain coordination; newsvendor; production management; agricultural produce

资金

  1. Ministry of Science and Technology [MOST104-2221-E-006-095]

向作者/读者索取更多资源

Agricultural produce deteriorates in both quality and quantity over time, and how to determine appropriate operating and marketing strategies to reduce the loss from rottenness is essential in supply chains for such items. This study considers a two-echelon supply chain in which agricultural produce is provided by a grower to a wholesaler, and the harvest quantity for the grower may decrease due to unpredictable pest problems or weather factors. In addition, agricultural produce may be damaged during transportation and thus become inferior products with less value. The two different scenarios are considered in this study: with and without a contractual agreement, to develop the corresponding optimal pricing strategies for the grower and wholesaler. The results indicate that a contractual agreement by setting moderate ordering boundaries can achieve a win-win situation for both parties by mitigating the grower's risk, since it can encourage the grower to plant more produce and thus ensure that the wholesaler can have enough produce to sell. Besides, in case that a low proportion of inferior products and a low discount rate can be managed, the use of contractual agreements would be beneficial for the grower. Moreover, the rise in the retailing prices of both the regular and inferior agricultural produce may collectively increase the total profit of the supply chain, but can actually hurt the wholesaler's profit.

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