Analysis of procurement strategies in a two-period fresh product supply chain

Abstract

Purpose

Motivated by the wide application of procurement strategies in retailing, this paper aims to examine the effect of procurement strategies on decisions and profits and strategic inventory (SI) is considered.

Design/methodology/approach

The game-theoretic models are developed under a two-period fresh product supply chain (FSC), and consist of the mode of purchasing products only in the first period without SI (Scenario S), the mode of purchasing products in every period without SI (Scenario T) and the mode of purchasing products in every period with SI (Scenario TS).

Findings

Conducting the calculating and comparing, some major findings can be concluded. In general, two-period purchasing strategies (Scenarios T and TS) promote a higher freshness-keeping effort than the single buying strategy (Scenario S). Regarding the pricing strategy, SI and Scenario S can both contribute to obtaining a lower wholesale price, the retailer's pricing is relatively complicated and hinges on the consumer's sensitivity to freshness-keeping effort and the holding cost. Besides, comparing the sales quantity and the profit, the authors find that Scenario TS stimulates more demands and brings more profits for the manufacturer. However, Scenario TS is not the optimal selection for the reason that SI sometimes hurts the retailer and even the whole supply chain. Whereas, when the holding cost is in a certain range, Scenario TS will lead to a win-win situation.

Originality/value

The main findings of this study can give the enterprises some advice on the procurement strategies of fresh products and the decisions of pricing and the freshness-keeping effort.

Citation

Wang, G. and Ma, C. (2024), "Analysis of procurement strategies in a two-period fresh product supply chain", Kybernetes, Vol. 53 No. 4, pp. 1450-1483. https://doi.org/10.1108/K-09-2022-1233