Pricing and inventory decisions in the food supply chain with production disruption and controllable deterioration

Pricing and inventory decisions in the food supply chain with production disruption and... Food deterioration is becoming a crucial problem for most countries in the world, which may cause both economical losses and environmental damages. In this paper, a Stackelberg gaming model for a three-level food supply chain (consists of one retailer, one vendor and one supplier) with production disruption is established, which aims to study the optimal pricing, inventory and preservation decisions that maximize the individual profit. In the decentralized supply chain, upstream firms act as leaders and downstream firms as followers. Due to the mathematical complexity, an illustrative algorithm is developed to solve the problem. Numerical tests show that retailer's preservation investment not only benefits itself, but also benefits the vendor and the supplier. Comparing the optimal decisions to that in the ‘forward integration’ and ‘backward integration’ model, supply chain members' vertical cooperation helps to enhance the total profit. Meanwhile, the carbon footprint of the food supply chain is also studied. It is found that, vertical cooperation contributes to the reduction of carbon emission. In most situations, ‘forward integration’ outperforms ‘backward integration’ strategy because it incents the retailer to invest more in preservation and reduce food deterioration. Other managerial implications are also shown in the paper. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Cleaner Production Elsevier

Pricing and inventory decisions in the food supply chain with production disruption and controllable deterioration

Loading next page...
 
/lp/elsevier/pricing-and-inventory-decisions-in-the-food-supply-chain-with-os47lyA5xo
Publisher
Elsevier
Copyright
Copyright © 2018 Elsevier Ltd
ISSN
0959-6526
D.O.I.
10.1016/j.jclepro.2018.01.152
Publisher site
See Article on Publisher Site

Abstract

Food deterioration is becoming a crucial problem for most countries in the world, which may cause both economical losses and environmental damages. In this paper, a Stackelberg gaming model for a three-level food supply chain (consists of one retailer, one vendor and one supplier) with production disruption is established, which aims to study the optimal pricing, inventory and preservation decisions that maximize the individual profit. In the decentralized supply chain, upstream firms act as leaders and downstream firms as followers. Due to the mathematical complexity, an illustrative algorithm is developed to solve the problem. Numerical tests show that retailer's preservation investment not only benefits itself, but also benefits the vendor and the supplier. Comparing the optimal decisions to that in the ‘forward integration’ and ‘backward integration’ model, supply chain members' vertical cooperation helps to enhance the total profit. Meanwhile, the carbon footprint of the food supply chain is also studied. It is found that, vertical cooperation contributes to the reduction of carbon emission. In most situations, ‘forward integration’ outperforms ‘backward integration’ strategy because it incents the retailer to invest more in preservation and reduce food deterioration. Other managerial implications are also shown in the paper.

Journal

Journal of Cleaner ProductionElsevier

Published: Apr 10, 2018

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches

$49/month

Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.

$588

$360/year

billed annually
Start Free Trial

14-day Free Trial