Dynamic Decision-Making in Fresh Products Supply Chain with Strategic Consumers

Fresh agricultural products constantly loss freshness during sales, and strategic consumers choose the optimal purchase timing according to the freshness and prices. In this paper, we introduce freshness-keeping effort to describe the retailer’s freshness-keeping work, and provide a consumer utility function to describe strategic behavior. Additionally, we construct a dynamic decision-making model using the rational expectations equilibrium to improve the profits of each member. This study also designs a freshness-keeping cost-sharing and revenue-sharing contract to coordinate the supply chain. Finally, we verified the effectiveness of the model using numerical simulation. The results show that optimal order quantity and freshness-keeping effort under strategic consumers are lower than without strategic consumers. Second, prices during normal and discount periods are both positively correlated with valuation. In addition, the normal price is negatively correlated with order quantity and freshness-keeping effort, and discount price is positively correlated with order quantity. The correlation between discount price and freshness-keeping effort has a critical value, the discount price is positively correlated with freshness-keeping effort when below the critical effort, and negatively after exceeding the critical effort. Third, the combination contract can increase expected profits for both supplier and retailer, and help the decentralized supply chain achieve the expected profits of centralized supply chain.