Food supply chain coordination for growing items: A trade-off between market coverage and cost-efficiency

Nadia Pourmohammad‐Zia · Behrooz Karimi · Jafar Rezaei

31 citations0/0 files storedInternational Journal of Production Economics

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Supply Chain and Inventory Management Quality and Supply Management Sustainable Supply Chain Management

Abstract

The accurate operation of a Food Supply Chain (FSC) is a critical issue as it directly interfaces with health and safety matters. This study addresses coordination and conflict management in a three-level FSC that embraces a new inventory type known as growing items like poultry and livestock. The chain involves a rearing farm as the supplier, a processed food producer as the manufacturer, and multiple processed food retailers. Vendor Managed Inventory (VMI) is applied by the manufacturer to handle the retailers' systems and prevent replenishment mismatches and thereby food waste. To increase its market coverage, the manufacturer needs to provide the retailers with enough incentives to enter this setting. So, a cost-sharing contract is designed under which the manufacturer undertakes a fraction of the retailers’ holding costs. Accordingly, the manufacturer faces two contradictory targets, increasing its market coverage by convincing the retailers to enter the system on the one hand and managing its costs efficiently on the other hand. An analytic solution approach with a game-theoretic perspective is developed to solve the model. Extensive numerical experiments and a case study are provided, presenting fruitful managerial insights that can be utilized by the policymakers and chain members under different settings. The results highlight the efficiency of our VMI and cost-sharing collaboration scheme in enhancing the performance of the chain.

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References

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2022A food bank network design examining food nutritional value and freshness: A multi objective robust fuzzy model 2023A four-echelon supply chain inventory model for growing items with imperfect quality and errors in quality inspection 2022An Inventory Model in a Three-Echelon Supply Chain for Growing Items with Imperfect Quality, Mortality, and Shortages under Carbon Emissions When the Demand Is Price Sensitive 2023Multi-echelon supply chain coordination: Contract sequence and cut-off policies

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