Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 24, 2021 erstellt
Description:
Problem definition: To limit fresh products’ waste, grocery retailers that manage limited shelf lifeproducts require suppliers to only send products with a remaining shelf life of at least a minimum life on receipt (MLOR). Such MLOR agreements may, however, substantially increase product waste at suppliers. We study coordinating contracts for a supply chain under an MLOR agreement, under profit and waste considerations. Further, we investigate the effects of MLOR agreements on suppliers and analyze how retailers can set MLOR agreements while reducing supply chain waste.Methodology/results: We study a supply chain of one retailer and one supplier. The supplier faces apositive production lead time and makes the production decision before the retailer’s order is placed. We consider the retailer as a Stackelberg leader offering a contract to the supplier. The supplier accepts the contract if his expected profit exceeds his reservation profit. We analytically study coordination contracts and the effect of MLOR agreements on supply chain profit and waste and illustrate this numerically. We show that coordination is possible when the supply chain is either retailer-operated or supplier-operated. In the supplier-operated supply chains, coordination is possible through a two-part tariff contract with a zero wholesale price and a fixed side payment that the retailer receives. In a retailer-operated supply chain, coordination is achievable via various commonly known contracts. We show analytically that when the MLOR agreement does not require the freshest products, the supplier’s waste declines, allowing him to accept a lower wholesale price.Managerial implications: While retailers commonly request a high MLOR, we show that they may shoot themselves in the foot by doing so and could effectively create more waste in the supply chain rather than less. Reducing the MLOR level lowers the wholesale price and can Pareto improve profit while reducing waste significantly