Decision making and coordination of fresh agriculture product supply chain considering fairness concerns

Abstract

This paper investigates decisions in a supply chain of fresh agricultural products considering fairness concerns. By considering a two-echelon supply chain consisting of a retailer and a manufacturer, this paper discusses the effect of the manufacturer’s fairness concerns and the retailer’s fairness concerns on the fresh agriculture product supply chain within the framework of Nash bargaining. Meanwhile, a revenue-sharing contract is designed to coordinate the supply chain with fairness concerns. The results show that the manufacturer’s behavioral tendency of fairness concerns will reduce their fresh-keeping effort; thereby, the freshness of products and market demand will also decrease. The behavioral tendencies of fairness concerns of both sides reduce the overall effectiveness of the supply chain and adversely affect the stability of the fresh produce supply chain. Both the optimal retail price and the fresh-keeping effort can be achieved while all parties get higher utilities under the revenue-sharing contract in comparison to the case without coordination.