Pricing And Cold-chain Service Decisions In A Fresh Agri-product Supply Chain With Cold-chain Service Outsourcing

Fresh agri-products are a special type of deteriorating items,characterized by quantity loss and quality loss in the long distance transportation.To be specific,quantity loss captures physical deterioration and quality loss reflects a decrease in the freshness level.In China,it is known that quantity loss and quality loss of fresh agri-products are rather high within a long period,because fresh agri-products are inevitably distributed from production bases to end markets with long distance transportation and the cold-chain service does not develop perfectly to satisfy the requirements of fresh agri-products in distribution.With quantity loss and quality loss of fresh agri-products,a fresh agri-product supply chain consisting of suppliers,retailers and a third-party logistics(3PL)provider is considered,where the cold-chain service is outsourced to the 3PL provider.The focus is on channel leadership,supply chain integration,cold-chain service outsourcing involvement,and on how they influence pricing and cold-chain service decisions and supply chain performance,as follows:Initially,to analyze the effects of channel leadership on pricing and cold-chain service decisions in a fresh agri-product supply chain with a supplier,a retailer and a 3PL provider,a case is developed where the retailer is a leader or a follower,respectively.When the retailer is a follower in the fresh agri-product supply chain,there are two settings where the 3PL provider first moves and the supplier first makes decisions,respectively.With an exogenous cold-chain service price,it is interesting that the supplier with channel leadership may not obtain a higher profit,which is in contrast to conventional intuition.When service sensibility is lower than a threshold,all supply chain members prefer an identical channel leadership mode;that is,the supply chain achieves a win-win-win outcome.Otherwise,the preferences of supply chain members are conflicting,not resulting in a win-win-win outcome.The analysis illustrates that the main results with an exogenous cold-chain service price remain unchanged when the cold-chain service price is endogenous.In the case where the retailer is the leader in the fresh agri-product supply chain,it shows that the supplier and the 3PL provider may not benefit more from channel leadership when the cold-chain service price is exogenous,which is consistent with the case with a follower retailer.The preferences of the channel leadership mode of the supply chain partners are always inconsistent,which cannot lead to a win-win-win outcome.However,with an endogenous cold-chain service price,all supply chain partners prefer an identical channel leadership mode under certain conditions.Then,a fresh supply chain with a 3 PL provider,a supplier and two competitive retailers is modelled to explore supply chain integration of vertical integration between the supplier and one of the retailers and horizontal integration between the retailers.When the cold-chain service price is exogenous,relative to no integration,vertical integration is more beneficial to decreasing quantity loss and quality loss of fresh agri-products,whereas horizontal integration is detrimental.For the 3PL provider,vertical integration is more profitable,while horizontal integration hurts the profit.The supplier can obtain more profit under no integration than under horizontal integration.How product substitution,the extent of quantity loss and service sensitivity affect the preference of integration modes of a retailer is analyzed.More specially,when product substitution is low,the retailer prefers vertical integrationbetween the rival and the supplier.Moderate product substitution makes the retailer choose no integration.For high product substitution,horizontal integration is more beneficial to the retailer.When either the extent of quantity loss or service sensitivity is low,the retailer prefers horizontal integration.The retailer can reap a higher profit under no integration for the moderate extent of quantity loss or moderate service sensitivity.In addition,vertical integration between the rival and the supplier benefits the retailer more,when there is high extent of quantity loss or high service sensitivity.With an endogenous cold-chain service price,the effects of product substitution,the extent of quantity loss and service sensitivity on the retailer's preference of integration modes still hold,suggesting whether the cold-chain service price is endogenous does not matter.Finally,it develops a fresh agri-product supply chain consisting of one supplier,one retailer and one 3PL provider to investigate the mechanism of adopting different cold-chain service outsourcing involvement modes.The analysis shows that increasing the consumer reservation value can hurt the decrease in quantity loss and quality loss of fresh agri-products.The effect of the consumer reservation value on the cold-chain service level under the retailer outsourcing involvement mode is lower than that under the supplier outsourcing involvement mode,when the 3 PL provider applies a traditional quantity discount scheme.The effects of outsourcing involvement on the cold-chain service level is dependent on the consumer reservation value.The retailer's choosing an outsourcing involvement mode depends on the combination of the cost factor of the cold-chain service and the consumer reservation value.From all supply chain partners' perspectives,there is identical preference of outsourcing involvement when certain conditions are satisfied,due to that the retailer outsourcing involvement mode is more profitable for the supplier and the 3PL provider.Otherwise,the preference of outsourcing involvement is inconsistent when the conditions cannot be satisfied.With modified quantity discounts offered by the 3PL provider,how the consumer reservation value affects quantity loss and quality loss is changed.The 3 PL provider's preference is from the retailer outsourcing involvement mode to the supplier outsourcing involvement mode,as the consumer reservation value is from a low level to a high level,which is significantly different from the case with traditional quantity discounts.Similar to traditional quantity discounts,modified quantity discounts can make all supply chain partners prefer an identical outsourcing involvement mode under certain conditions.In summary,based on channel leadership,supply chain integration and cold-chain service outsourcing involvement,this dissertation effectively studies the pricing and cold-chain service decisions in a fresh agri-product supply chain.Many important findings are derived.More speciffically,having channel leadership may not result in a higher profit.The effects of integration on a retailer depends on product substitution,the extent of quantity loss and service sensitivity,respectively.As well,all supply chain parnters can prefer an identical mode of cold-chain service outsourcing involvement under certain conditions.However,there are some limitations in the areas of research assumptions,research contents as well as research modeling.For example,deterministic supply,demand and loss of fresh agri-products are considered.Assume that information is symmetric and partners are risk neutral.Also dual-channel,incentive mechanism and inventory decision are not developed.As a result,studying the pricing and cold-chain service decisions in a fresh agri-product supply chain is fairly interesting from these directions.