This paper studies an innovative agricultural partnership model in the dairy industry. In developing regions, farmers are constrained by limited resources, while it is costly for an enterprise to set up new facilities and raise dairy animals all on its own. Under the partnership model, dairy animals are raised by individual farmers during the maturing stage and then by the enterprise during the milking stage. This can lower the enterprise’s investment cost, ensure milk quality, and also expand the farmers’ capacity given that a new batch can be raised when the old batch goes to the enterprise’s facilities. We find that from the enterprise’s perspective, the performance of this model depends on the farmers’ original capacity and capacity expansion ratio (i.e., how much it can expand under partnership). The profitability of the enterprise can either increase in the farmers’ original capacity if the expansion ratio is small or decreases otherwise. Compared with the conventional decentralized model and the independent integrated model, the partnership model is particularly preferred when the enterprise’s market size is intermediate. Several extensions of our model show that the government quality subsidy offered to the farmers may sometimes lower dairy product quality as well as the enterprise’s profit; when the enterprise aims to maximize the total profit of the partnership, it will contract with more farmers and produce more dairy products; and if the farmers have more bargaining power, the partnership model will benefit the farmers more but be less preferable to the enterprise.
M otivated by emerging practice in the cut flower industry, we consider a periodic-review inventory system for a perishable product with a lifetime of two periods. There are two separate customer demands for the new product with two-period remaining lifetime and the old product with one-period remaining lifetime, and a fixed proportion of the unsatisfied demand for one product will purchase the other product as a substitute. One distinctive feature of our system is that a random portion of the sold new product is returned and can be remanufactured and remarketed as the old product for sale. The objective is to maximize the expected total discounted profit over a finite planning horizon. We show that the optimal remanufacturing policy is a modified base-stock policy, and that the optimal manufacturing quantity of the new product decreases in the inventory level of the old product after remanufacturing. Furthermore, when the inventory level of the old product is large, the optimal manufacturing quantity asymptotically approaches a constant, which is lower and upper bounded by two newsvendor fractile solutions. We also conduct a numerical study to derive insights into the effects of remanufacturing and demand substitution. In particular, we show that remanufacturing can be a powerful way of mitigating negative environmental impacts in the cut flower industry. Finally, we discuss two model extensions that allow a joint production capacity and a multi-period lifetime.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.