Citation: Zheng, X. The Coordination
of Multi-Stage Discounts in a Dual
Channel Fresh Agricultural Produce
Supply Chain: Minimizing the Loss
of Quantity and Quality.
Sustainability 2022, 14, 2174.
https://doi.org/10.3390/su14042174
Academic Editor: David Abler
Received: 22 December 2021
Accepted: 11 February 2022
Published: 14 February 2022
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Article
The Coordination of Multi-Stage Discounts in a Dual Channel
Fresh Agricultural Produce Supply Chain: Minimizing the Loss
of Quantity and Quality
Xiaojing Zheng
1,2
1
School of Economic and Management, Weifang University of Science and Technology, Weifang 262700, China;
zhengxj@wfust.edu.cn
2
Center for Agriculture-Sage Culture Studies, Weifang University of Science and Technology,
Weifang 262700, China
Abstract:
This paper explores the coordination of the agricultural cooperative to supermarket or
E-commerce supply chain, under the condition of quantity loss with a mixed decay function of
exponential and logistical distribution. The nature of this process is analyzed, and the corresponding
demand and supply functions with single- and multi-stage discount strategies are constructed,
respectively, to create a working model. The optimal discount ratios for supermarkets and agricultural
cooperatives in decentralized and centralized decision-making modes coupled with single- and
multi-stage discounts are calculated, respectively. Finally, a universal optimal strategy is designed,
which can be applied to various quantity decay scenarios and makes the discount strategy more
generalized. The results show that discounts can coordinate supply chains more effectively; not
only would fresh agricultural produce be sold out before it starts to rot, but also the benefit conflicts
arising from both supermarkets vs. cooperatives and traditional vs. E-commerce channels could be
equilibrated. Further, multi-stage discounts are more difficult to coordinate than single-stage ones,
the corresponding optimal discount ratios rely on the initial quantity of fresh agricultural produce in
the supply chain, its market share in the traditional distribution channel, the potential market size,
retail price, the price sensitivity coefficient of the channel, the cross-elasticity coefficient of prices
between different channels, and the properties of the quantity loss. It is concluded that, regardless of
what kind of quantity and quality loss occurs, whether decentralized or centralized decision making
is selected, or whether the supermarket’s or agricultural cooperative’s discount ratio is considered,
a universal price discount consisting of a fixed term and a drift term could both maximize supply
chain profit and coordinate this dual-channel supply chain.
Keywords: fresh agricultural produce supply chain; coordination; discount contract; quantity loss
1. Introduction
In the last 20 years, the fresh agricultural produce supply chain has become a major
field of study (see, for example, Clark and Hobbs, 2018 [
1
]; Vernier et al., 2021 [
2
]; Tian
X et al., 2020 [
3
]; Walker et al., 2016 [
4
]). A broad range of subjects has been researched
from the abstract, such as modeling (see Clark and Hobbs, 2018 [
1
]; Magalhães et al.,
2021 [
5
]; Siddh et al., 2017 [
6
]; Xiaofeng Xu et.al., 2021 [
7
]), sustainability (Vernier et al.,
2021 [
2
]), propagation (Smith, 2011) [
8
] and operation (Nosratabadi et al., 2020 [
9
]), to
physical systems such as retailer behavior (N. Xu et al., 2021 [
10
]), pricing (C. Huang et al.,
2021) [
11
]; Gaggero et al., 2021 [
12
]), risk (Walker et al., 2016 [
4
]), and contract (Zheng et al.,
2017 [
13
]). In China, agricultural cooperatives have developed rapidly in recent years, and
they cooperate with supermarkets to provide a sustainable and stable quality of agricultural
products to consumers. This new fresh agricultural produce supply chain works well if
and only if its operational steps are properly synchronized. It is a dual-channel supply
chain that uses traditional and E-commerce channels. In the former, customers buy fresh
Sustainability 2022, 14, 2174. https://doi.org/10.3390/su14042174 https://www.mdpi.com/journal/sustainability
