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Coordination Of Agri-Food Chain With Revenue-Sharing Contract Under Stochastic Output And Stochastic Demand

Author

Listed:
  • XIA ZHAO

    (Center for Food Security and Strategic Studies, Nanjing University of Finance and Economics, Nanjing 210003, China)

  • FANGWEI WU

    (Institute of Finance and Economics, Shanghai University of Finance and Economics, Shanghai 200433, China)

Abstract

Due to the effects of uncertain factors such as seasonal weather and plant/animal diseases, the output of agricultural production is uncertain given certain agricultural inputs. This paper addresses the issue of coordinating agri-food chain with perishable goods by revenue-sharing (RS) contract when both output and demand are random. Following a RS contract, a supplier decides on agricultural input (e) and deliveries all goods with a price (ω) lower than unit production cost to the retailer while a retailer decides on the retail price (p) and return 1–Φ share (percentage) of its revenue to the supplier. For such a contract, the necessary condition of coordinating the chain is that the expected revenue function is concave. Under the channel coordination, the relationship between RS contract parameters ω and Φ as well as the range of Φ are given. For both output and demand random factor with uniform distribution, the concavity of the expected revenue function is presented. A numerical example illustrates the correctness of our analysis. The results of numerical example show that RS contract is able to coordinate the agri-food chain when the expected revenue function is concave. The results also show that the optimal decisions ofpandeare closely related to the demand price elasticity and the range of Φ is widened when the expected output increases.

Suggested Citation

  • Xia Zhao & Fangwei Wu, 2011. "Coordination Of Agri-Food Chain With Revenue-Sharing Contract Under Stochastic Output And Stochastic Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 28(04), pages 487-510.
    • Handle: RePEc:wsi:apjorx:v:28:y:2011:i:04:n:s021759591100320x
    DOI: 10.1142/S021759591100320X
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    Citations

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    Cited by:

    1. Yan Shi & Fulin Wang & Ying Wang & Lili Jia, 2023. "The Maize Supply Chain Coordination Mechanism under Yield Uncertainty Caused by Drought: A Study in the Heilongjiang Province of China," Sustainability, MDPI, vol. 15(14), pages 1-17, July.
    2. Nematollahi, Mohammadreza & Tajbakhsh, Alireza & Mosadegh Sedghy, Bahareh, 2021. "The reflection of competition and coordination on organic agribusiness supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    3. Xia Zhao & Ning Li & Liang Song, 2019. "Coordination of a Socially Responsible Two-Stage Supply Chain Under Random Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(05), pages 1-27, October.
    4. Chethana Chandrasiri & Subodha Dharmapriya & Janappriya Jayawardana & Asela K. Kulatunga & Amanda N. Weerasinghe & Chethana P. Aluwihare & Dilmini Hettiarachchi, 2022. "Mitigating Environmental Impact of Perishable Food Supply Chain by a Novel Configuration: Simulating Banana Supply Chain in Sri Lanka," Sustainability, MDPI, vol. 14(19), pages 1-20, September.
    5. Sarker, Bhaba R., 2014. "Consignment stocking policy models for supply chain systems: A critical review and comparative perspectives," International Journal of Production Economics, Elsevier, vol. 155(C), pages 52-67.
    6. Nguyen Thi Nha Trang & Thanh-Thuy Nguyen & Hong V. Pham & Thi Thu Anh Cao & Thu Huong Trinh Thi & Javad Shahreki, 2022. "Impacts of Collaborative Partnership on the Performance of Cold Supply Chains of Agriculture and Foods: Literature Review," Sustainability, MDPI, vol. 14(11), pages 1-28, May.
    7. Xia Zhao & Runsheng Yin, 2018. "Coordination of a socially responsible two-stage supply chain under price-dependent random demand," 4OR, Springer, vol. 16(4), pages 379-400, December.
    8. Fei Ye & Qiang Lin & Yina Li, 2020. "Coordination for contract farming supply chain with stochastic yield and demand under CVaR criterion," Operational Research, Springer, vol. 20(1), pages 369-397, March.
    9. Nur Ayvaz‐Çavdaroğlu & Burak Kazaz & Scott Webster, 2021. "Incentivizing Farmers to Invest in Quality through Quality‐Based Payment," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3812-3830, October.

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