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Designing supply contracts for perishable goods with two periods of shelf life

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  • Yenho Chung
  • Feryal Erhun

Abstract

A critical feature of a perishable product is its age. When “old” units are on the shelf along with “young” units, a supplier who is designing a contract for a buyer must consider the product’s age. While numerous papers in the contracting literature have discussed channel coordination, none have studied the case in which the supplier needs to account for both old and young units. This article considers a supply chain for perishable goods with a two-period shelf life to address the aforementioned supplier’s problem. A two-level wholesale price contract, a two-level buy-back contract, and a buy-back contract with channel rebates are studied. The channel-coordinating conditions under each of these contracts are demonstrated. Although all three contracts can coordinate the channel, potential implementation issues with each of them are discussed and guidance for suppliers who want to design a contract when selling both old and young units is provided.

Suggested Citation

  • Yenho Chung & Feryal Erhun, 2013. "Designing supply contracts for perishable goods with two periods of shelf life," IISE Transactions, Taylor & Francis Journals, vol. 45(1), pages 53-67.
    • Handle: RePEc:taf:uiiexx:v:45:y:2013:i:1:p:53-67
    DOI: 10.1080/0740817X.2012.654847
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    Citations

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    Cited by:

    1. Avinadav, Tal, 2020. "The effect of decision rights allocation on a supply chain of perishable products under a revenue-sharing contract," International Journal of Production Economics, Elsevier, vol. 225(C).
    2. Zhou, Quan Spring & Olsen, Tava Lennon, 2017. "Inventory rotation of medical supplies for emergency response," European Journal of Operational Research, Elsevier, vol. 257(3), pages 810-821.
    3. Kebing Chen & Jing‐Sheng Song & Jennifer Shang & Tiaojun Xiao, 2022. "Managing hospital platelet inventory with mid‐cycle expedited replenishments and returns," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2015-2037, May.
    4. Dillon, Mary & Oliveira, Fabricio & Abbasi, Babak, 2017. "A two-stage stochastic programming model for inventory management in the blood supply chain," International Journal of Production Economics, Elsevier, vol. 187(C), pages 27-41.
    5. Chernonog, Tatyana & Avinadav, Tal, 2019. "Pricing and advertising in a supply chain of perishable products under asymmetric information," International Journal of Production Economics, Elsevier, vol. 209(C), pages 249-264.
    6. Ketzenberg, Michael & Oliva, Rogelio & Wang, Yimin & Webster, Scott, 2023. "Retailer inventory data sharing in a fresh product supply chain," European Journal of Operational Research, Elsevier, vol. 307(2), pages 680-693.
    7. Civelek, Ismail & Karaesmen, Itir & Scheller-Wolf, Alan, 2015. "Blood platelet inventory management with protection levels," European Journal of Operational Research, Elsevier, vol. 243(3), pages 826-838.
    8. van Sambeeck, J.H.J. & van Brummelen, S.P.J. & van Dijk, N.M. & Janssen, M.P., 2022. "Optimal blood issuing by comprehensive matching," European Journal of Operational Research, Elsevier, vol. 296(1), pages 240-253.
    9. Anand Paul & Tharanga Rajapakshe & Suman Mallik, 2019. "Socially Optimal Contracting between a Regional Blood Bank and Hospitals," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 908-932, April.
    10. Kenan, Nabil & Diabat, Ali, 2022. "The supply chain of blood products in the wake of the COVID-19 pandemic: Appointment scheduling and other restrictions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).

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