Decision‐making and coordination of a three‐tier fresh agricultural product supply chain considering dynamic freshness‐keeping effort

Abstract

Abstract The freshness‐keeping of agricultural products is an essential issue that affects business development, food safety, and human health. Due to the structural characteristics of the supply chain, keeping the freshness of agricultural products involves different entities and multiple links, which is a long‐term strategic issue requiring significant investment. Given the perishability of agricultural products, the aging of preservation facilities, or the decline of technology, it is critical to consider the multitier freshness‐keeping strategy from a dynamic perspective. Therefore, this paper studies dynamic freshness‐keeping and coordination of a multitier agricultural product supply chain. We first construct a differential equation considering the three‐tier freshness‐keeping efforts. Then, we compare the optimal freshness‐keeping efforts, retail price, and system profit between the decentralized and centralized decision‐making models. Finally, two contracts based on cost‐sharing and secondary transfer payment are designed to coordinate the decentralized decision‐making model. Results show that (i) as the decision sequence moves backward, freshness‐keeping effort decreases at each tier for the same freshness‐keeping efficiency; (ii) adopting the centralized decision‐making model offers several advantages, including well‐balanced freshness‐keeping efforts across multiple tiers, a lower retail price, and higher system profit; and (iii) under a specified payment range, the “freshness‐keeping cost‐sharing‐two‐part fee” contract motivates entities to increase freshness‐keeping efforts and realizes individual and system‐wide profit improvements.