Outsourcing logistics channel coordination with revenue-sharing contracts for low value perishable product

摘要

This paper is to resolve the coordination problems of an outsourcing logistics channel where a third party logistics service provider (TPLSP) offers logistics service for a client who procures a low value perishable product, such as fresh fruit or vegetable, which usually undergo a long-distance transportation or long-time store during logistics process. In virtue of the product''s low value and perishable characteristics, the logistics service price selected by the TPLSP and product deteriorating rate have become important impact factors on the client''s order decision. A dynamic game model is established to analyze the impact of deteriorating rate on the client''s optimal order quantity and profit, and the benefit conflicts between them under a traditional transaction pricing contract, which leads to order quantity distortion and losses of the system''s optimal profits. To resolve the problem, a revenue-sharing contract is designed which can achieve full channel coordination and a win-win outcome under proper contract terms. Finally, the “tomato event” reported by newspaper is analyzed and the results effectively validate the conclusions of the theory model.