When does food become surplus? A game theoretical model for philanthropic partnerships in food supply chains

This paper presents a game theoretical model designed to examine the dynamics of philanthropic partnerships between commercial food supply chains and charitable organizations engaged in food redistribution. The primary objective of this model is to provide decision support and analytical tools for managing food effectively by maximizing profitability for commercial organizations, minimizing costs for charitable organizations, and facilitating surplus food recovery and redistribution within food supply chains. We explore the impact of uncertainties related to food freshness and consumer demand, as well as the effects of operational costs and parameters. Our results shed light on the interplay between these factors and the decisions made by the involved parties. The findings reveal a freshness threshold for optimal decision-making as food ages within the supply chain. When food has just been received, waiting for consumer demand to materialize is the optimal strategy. However, as food reaches a certain age threshold, it becomes optimal to donate as surplus. This donation decision remains optimal for a specific time window after which the donation is no longer accepted, and the surplus food must be disposed of in a landfill. We also demonstrate that food waste is impacted by the supply chain operational parameters and as such can be mitigated. Our analysis shows that premium pricing increases waste risk as suppliers hold food products longer in pursuit of profit upsides. It also shows that tax credits, when used strategically, can trigger donations; however, raising them further wastes public funds without reducing food waste. Finally, regulators can apply tiered disposal fees to incentivize food waste reduction, with higher disposal costs for high-price categories to encourage donations and lower disposal costs for low-price ones to avoid encouraging suppliers to hold stock too long. The implications of this research extend to various stakeholders, including government, semi-governmental, and commercial entities.