Decision-Making on the Supply Chain of Fresh Agricultural Products with Two-Period Price and Option Contract

Bo Yan, Gaodi Liu (), Xiaohua Wu () and Jiwen Wu ()
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Bo Yan: School of Economics and Finance, South China University of Technology, Guangzhou Higher Education Mega Centre, Panyu District, Guangzhou 51006, P. R. China
Gaodi Liu: School of Economics and Finance, South China University of Technology, Guangzhou Higher Education Mega Centre, Panyu District, Guangzhou 51006, P. R. China
Xiaohua Wu: School of Economics and Finance, South China University of Technology, Guangzhou Higher Education Mega Centre, Panyu District, Guangzhou 51006, P. R. China
Jiwen Wu: School of Economics and Finance, South China University of Technology, Guangzhou Higher Education Mega Centre, Panyu District, Guangzhou 51006, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2021, vol. 38, issue 01, 1-22

Abstract: The price risk of fresh agricultural products has been a significant topic in recent years. Taking the two-level fresh agricultural product supply chain as the research object, this paper studies the optimal ordering and coordination of supply chain based on two-period price, wholesale price and option contract. The optimal order decision of the retailer at the single period price and the optimal decision corresponding to the supplier are obtained when the output of the supplier is uncertain under decentralized decision-making. The range of penalty cost parameter that avoids supplier default is also obtained. The effect of two-period price on the optimal order decision and supply chain profits is discussed when the production yield of the supplier is fixed. Cost-sharing contract is introduced to increase the order quantity and achieve coordination because the option contract cannot completely make the supply chain coordination with two-period price. This paper provides a low-cost approach that can be applied in fresh agricultural supply chain to solve financing and order problems.

Keywords: Fresh agricultural product supply chain; option contract; decision-making; supply chain coordination (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S0217595920500384

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