An Operations Optimisation Model for Fresh Food Produce Supply Chain Considering Time-Varying Freshness and Consumer Utility

This paper investigates the optimal decisions of freshness-keeping effort levels, retail pricing, order quantity, and coordination contract parameters in the fresh product supply chain, considering the time-varying produce food freshness and customer utilities. A game equilibrium based on the backward induction method is analyzed, and a coordination contract facilitated to achieve Pareto improvement of firms is investigated. The conclusions demonstrate that closed-form solutions uniquely exist for each firm, but the solutions are inferior to the integrated optimal decisions. A wholesale contract is analyzed based on a linear combination of the supplier's marginal cost and the retailer's marginal revenue that can motivate each firm's actions to align with the optimal decisions. The findings reveal that the two firms can flexibly share the integrated supply chain's optimal profit within the coordination contract and that each firm achieves Pareto improvement. In addition, the monotonicity of the optimal closed-form solutions is discussed for crucial parameters, which may help firms improve their profits. Finally, numerical analysis and managerial insights are given to enhance practicability.