Coordinating a Three-Echelon Fresh Product Supply Chain with Freshness-keeping Effort under a Wholesale and Maintenance Price Agreement

This paper investigates a three-echelon fresh product supply chain (FPSC) that includes the retailer, supplier, and logistics service provider in two decision-making structures including decentralized and centralized with an integrated sales approach and considering changes in consumer buying behavior allowing products to be sold through online and offline channels. In a decentralized decision-making approach, FPSC members individually and independently optimize their decision variables (retailer’s selling price and sales effort level, the supplier’s wholesale price, and the service price and freshness-keeping effort offered by the logistics service provider), while in a centralized approach, the FPSC decision variables are optimized from an overall and holistic perspective. To move from a decentralized to a centralized decision-making structure, this paper proposes a new coordination approach using wholesale and maintenance price agreements to coordinate decision variables in the investigated FPSC. After, numerical results for decision variables of the proposed FPSC members and the overall profit in two decision-making structures, decentralized and centralized decision-making, are examined and compared to analyze the performance of the models. The results show that the proposed mechanism for achieving the coordinated model not only improves the overall profit of the FPSC but also improves the service level, freshness level of products, and profit of the FPSC members. Sensitivity results show that reducing storage and supply prices for fresh products increases the attractiveness of the retail sector for investment, leading to the adoption of broader product sales policies and boosting overall FPSC profitability.