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Fresh-product supply chain management with logistics outsourcing


  • Cai, Xiaoqiang
  • Chen, Jian
  • Xiao, Yongbo
  • Xu, Xiaolin
  • Yu, Gang


We consider a supply chain in which a producer supplies a fresh product, through a third-party logistics (3PL) provider, to a distant market where a distributor purchases and sells it to end customers. The product is perishable, both the quantity and quality of which may deteriorate during the process of transportation. The market demand is random, sensitive to the selling price as well as the freshness of the product. We derive the optimal decisions for the three supply chain members, including the 3PL provider's transportation fee, the producer's shipping quantity and wholesale price, and the distributor's purchasing quantity and retail price. We find that the presence of the 3PL provider in the supply chain has a significant impact on its performance. We propose an incentive scheme to coordinate the supply chain. The scheme consists of two contracts, including a wholesale-market clearance (WMC) contract between the producer and the distributor, and a wholesale-price-discount sharing (WDS) contract between the producer and the 3PL provider. We show that the proposed contracts can eliminate the two sources of “double marginalization” that exist in the three-tier supply chain, and induce the three parties to act in a coordinated way.

Suggested Citation

  • Cai, Xiaoqiang & Chen, Jian & Xiao, Yongbo & Xu, Xiaolin & Yu, Gang, 2013. "Fresh-product supply chain management with logistics outsourcing," Omega, Elsevier, vol. 41(4), pages 752-765.
  • Handle: RePEc:eee:jomega:v:41:y:2013:i:4:p:752-765
    DOI: 10.1016/

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    References listed on IDEAS

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    Cited by:

    1. Wang, Xiuli & Zhu, Qianqian & Cheng, T.C.E., 2015. "Subcontracting price schemes for order acceptance and scheduling," Omega, Elsevier, vol. 54(C), pages 1-10.
    2. Pilar L. González-Torre & Jorge Coque, 2016. "How is a food bank managed? Different profiles in Spain," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 33(1), pages 89-100, March.
    3. Aguezzoul, Aicha, 2014. "Third-party logistics selection problem: A literature review on criteria and methods," Omega, Elsevier, vol. 49(C), pages 69-78.
    4. Lin Jiang & Yong Wang & Dongmei Liu, 2016. "Logistics cost sharing in supply chains involving a third-party logistics provider," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(1), pages 207-230, March.
    5. Kim, Taebok & Glock, Christoph H. & Kwon, Yongjang, 2014. "A closed-loop supply chain for deteriorating products under stochastic container return times," Omega, Elsevier, vol. 43(C), pages 30-40.
    6. Janssen, Larissa & Claus, Thorsten & Sauer, Jürgen, 2016. "Literature review of deteriorating inventory models by key topics from 2012 to 2015," International Journal of Production Economics, Elsevier, vol. 182(C), pages 86-112.
    7. Bouchery, Yann & Ghaffari, Asma & Jemai, Zied & Tan, Tarkan, 2017. "Impact of coordination on costs and carbon emissions for a two-echelon serial economic order quantity problem," European Journal of Operational Research, Elsevier, vol. 260(2), pages 520-533.
    8. Gürler, Ülkü & Alp, Osman & Büyükkaramikli, Nasuh Çağdaş, 2014. "Coordinated inventory replenishment and outsourced transportation operations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 400-415.
    9. repec:pal:jorsoc:v:68:y:2017:i:5:d:10.1057_s41274-016-0025-2 is not listed on IDEAS
    10. Feki, Yassin & Hajji, Adnène & Rekik, Monia, 2016. "A hedging policy for carriers’ selection under availability and demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 149-165.
    11. repec:spr:annopr:v:248:y:2017:i:1:d:10.1007_s10479-016-2167-7 is not listed on IDEAS
    12. Wu, Qing & Mu, Yinping & Feng, Yi, 2015. "Coordinating contracts for fresh product outsourcing logistics channels with power structures," International Journal of Production Economics, Elsevier, vol. 160(C), pages 94-105.
    13. Yang, Daojian & Qi, Ershi & Li, Yajiao, 2015. "Quick response and supply chain structure with strategic consumers," Omega, Elsevier, vol. 52(C), pages 1-14.
    14. Dye, Chung-Yuan, 2013. "The effect of preservation technology investment on a non-instantaneous deteriorating inventory model," Omega, Elsevier, vol. 41(5), pages 872-880.
    15. Lahyani, Rahma & Coelho, Leandro C. & Khemakhem, Mahdi & Laporte, Gilbert & Semet, Frédéric, 2015. "A multi-compartment vehicle routing problem arising in the collection of olive oil in Tunisia," Omega, Elsevier, vol. 51(C), pages 1-10.


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