Agricultural Supply Chain Coordination under Weather-Related Uncertain Yield

Yan Shi and Fulin Wang
Additional contact information
Yan Shi: College of Engineering, Northeast Agricultural University, Harbin 150030, China
Fulin Wang: College of Engineering, Northeast Agricultural University, Harbin 150030, China

Sustainability, 2022, vol. 14, issue 9, 1-12

Abstract: In the context of agriculture, we focus in this paper on a two-echelon supply chain consisting of a supplier facing weather-related yield uncertainty and a retailer facing market-linked demand uncertainty. We mainly investigated how the randomness of yield and demand influences the profit of the supply chain members and the performance of the entire supply chain. We adopted an additive random yield model to capture the effect of uncontrollable weather factors on crop yield. For the case where a wholesale price contract fails to achieve coordination, we propose a revenue-sharing contract with a new structural arrangement and explore its influence on the contract coordination ability. In the revised contract, the retailer purchases all the actual output from the supplier instead of an order quantity; thus, the retailer shares yield risk with the supplier. To look at the implications in detail, we conducted a numerical analysis where the uncertain yield of maize crops originates from the fluctuating rainfall; the results indicate that the revised revenue-sharing contract can achieve supply chain coordination, and all the members improve their profit. This paper shows that by redesigning the contract structure, the classical revenue-sharing contract still has the coordinating ability in the presence of simultaneous yield and demand uncertainties.

Keywords: weather factor; yield uncertainty; demand uncertainty; supply chain coordination (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/9/5271/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/9/5271/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:9:p:5271-:d:803466

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().