Fresh-Keeping Effort and Channel Performance in a Fresh Product Supply Chain with Loss-Averse Consumers’ Returns

Abstract

We consider a fresh product supply chain consisting of one fresh product supplier and one e-tailer. Supplier sells fresh products through e-tailer in an online market, and the e-tailer offers a full-refund return policy to loss-averse consumers and exerts a freshkeeping effort to keep the product at the optimum freshness level. By developing an analytical model, we derive the optimal price, quantity, and fresh-keeping effort jointly and verify that it is unique in the centralized setting. Based on the comparison, we demonstrate that the e-tailer's profit is greater with fresh-keeping effort than without it; therefore, the e-tailer has an incentive to engage in fresh-keeping effort. We also show that the return rate is independent of the fresh-keeping effort and consumers' loss aversion. In the decentralized setting, we first characterize the optimal wholesale price by the numerical study and then find that although the buyback contract still works, the revenue-sharing contract fails to achieve channel coordination under our model formulation. Furthermore, we develop a revenue-and cost-sharing contract that can coordinate the supply chain by designing a new contractual mechanism. Our numerical studies offer the Pareto improvement regions under the buyback and revenue-and cost-sharing contracts in which the supplier and e-tailer can earn more expected profits compared with being under wholesale price contract.

Fresh Agricultural Products Supply Chain Coordination and Volume Loss Reduction Based on Strategic Consumer

“…Many studies make the decision of the freshness-keeping effort/preservation technology investment whose purpose is to maintain quality and reduce the volume loss rate during the transport of fresh products [2,4,6,9,10,36] or only reduce volume loss rate during storage [32,33,35], so the revenue and cost sharing contract or revenue sharing and cooperative investment contract is designed to coordinate the two-echelon [6,9,32,33,35,36] or three-echelon [10] supply chain in order to cut down on the influence of the double marginalization effect. Gu et al [37] find that both the buyback contract and a revenue-and cost-sharing contract could coordinate the supply chain consisting of one fresh product supplier and one e-retailer. Differing from all these papers, both the volume loss during transport and the quality loss during the retail of fresh agricultural products and consumer strategic behavior are simultaneously taken into account in this paper, and a two-stage pricing decision is made.…”

Supply Chain Decisions and Coordination under the Combined Effect of Overconfidence and Fairness Concern

“…where μ is the degree of fairness concern and λ is the coefficient of sympathy, μ, λ ≥ 0, and 0 < λ < 1. e first part of equation (12) reflected the retailer's profit, whereas the second part evaluated the utility loss from disadvantageous inequality for the retailer when π m > π r , and the third part measured the loss from advantageous inequality for the retailer when π m < π r . Note that if the retailer's profit was worse than the manufacturers' profit (i.e., π m > π r ), the retailer will have negative utility under the condition of unfair aversion.…”

“…Based on the process above, we took the first-order and second-order partial derivatives of optimal wholesale price w d * with respect to β and μ in equation (12), respectively:…”

“…e latter contract is designed to share the cost of retailers' sales efforts on increasing sales. e buyback contract with promotional cost sharing has been widely applied in various industries, such as procurement of industrial materials [10], medical devices [11], and retailing [12]. e remainder of the paper is organized as follows: the relevant papers are described in Section 2, whereas Section 3 formalizes the problem.…”

Coordination Strategy of Dual-Channel Supply Chain for Fresh Product Under the Fresh-Keeping Efforts

“…In the supply chain coordination of fresh agricultural products, Gu, Fu, and Li (2018) studied a fresh product supply chain consisting of a fresh product supplier and an e-retailer, and derived the optimal price, quantity and fresh-keeping effect by analyzing the model. In the end, it is shown that the rate of return has nothing to do with the loss of freshness and the loss of consumers.…”