Pricing and Distribution Strategies of Fresh Agricultural Product Supply Chain considering Substitutes
Xiaomei He, Chi Zhang, Xiaotong Guo
Source abstract
In this article, we study the distribution, ordering, and pricing strategies when the supplier has a limited output and the retailer has substitute suppliers in a fresh agricultural product supply chain. The Stackelberg game method is adopted to study the optimal strategy of suppliers and retailers with suppliers as the leader and retailers as the follower. The results show that the wholesale price and selling price of suppliers are related to the price of substitutes and the substitution rate, the wholesale price and online selling price increase when the retailer introduces high-quality substitutes. When substitutes exist, the supplier is willing to distribute more fresh agricultural products to retailers. As the substitution rate increases, suppliers are willing to distribute more quantities. Therefore, retailers should choose more suppliers and fresh agricultural products with a higher substitution rate.
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