The Dynamics of Brand-Driven Quality Improvement Decision-Making in Multi-Small-Supplier Agri-Food Supply Chain: The Case of China

Abstract

This paper develops a system dynamics framework for the closed-loop agri-food brand supply chain (AFBSC) with multiple small farmer suppliers and one core brand manufacturer, and investigates the influences of various factors including brand effort, quality elasticity, price elasticity, revenue sharing, and the number of suppliers on the system behavior. The results show: (i) food quality is determined by all farmer suppliers, who might choose hitchhiking with the prisoner’s dilemma game in a decentralized decision-making mode; (ii) brand effort to improve brand value for food quality is mainly made by the core brand manufacturer, who presents a goal-seeking system dynamics (SD) manner with oscillation behavior around the expected quality of consumers; (iii) whether farmer suppliers or brand manufacturers, the centralized decision-making mode is more useful for them to increase revenue than the decentralized one; furthermore, the shared centralized decision-making mode is most useful for them to obtain more revenue, and the brand manufacturer is still the biggest beneficiary.