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Differential Game Analysis of Optimal Strategies and Cooperation in Omni-Channel Organic Agricultural Supply Chain

Author

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  • Qifan Hu

    (School of Management, Nanchang University, Nanchang 330031, China
    School of Business Administration, Nanchang Institute of Technology, Nanchang 330099, China)

  • Bing Xu

    (School of Management, Nanchang University, Nanchang 330031, China)

Abstract

This paper aims to investigate the optimal strategies for both centralized and decentralized modes in a two-echelon omni-channel organic agricultural supply chain (OASC) which consists of one farmer cooperative and one online retailer. Furthermore, the contracts of cooperation between the members in OASC are discussed. Based on both theory differential game and bi-level programming, we utilize the Nerlove–Arrow model and Stackelberg model to examine five cases of decision modes for both agents in the OASC. Then, we achieve the optimal strategies where the specified sets of organic growing effort, organic traceability technology effort, propaganda input, and service input can guarantee the maximization of the related profits. As a result, we could obtain the values of the corresponding optimal profits. For the centralized decision mode, the farmer cooperative and the online retailer make decisions with the goal of maximizing the overall profits of the OASC. Meanwhile, for the decentralized decision mode with four different cases, each member will independently make a decision with the goal of maximizing his own profit respectively. In detail, as for the fully decentralized decision mode, no contracts exist in OASC; regarding the decentralized decision mode with an information traceability cost sharing contract, two members pay the information traceability cost together; and for the decentralized decision mode with a revenue sharing contract, two members share the revenue together; as to the decentralized decision mode with a comprehensive contract, there are two cooperative ways that information traceability cost sharing and revenue sharing can be achieved. In addition, we also considered factors such as the consumer preferences of organic products and the cross influence between channels in models. Finally, through sensitivity analysis and comparison of optimal strategies and profits, we found that: (1) high consumer preferences of organic products and high cross influence between channels are profitable; and (2) the choice of contract is influenced by the relative size of the offline marginal income ratio and the online marginal income ratio.

Suggested Citation

  • Qifan Hu & Bing Xu, 2019. "Differential Game Analysis of Optimal Strategies and Cooperation in Omni-Channel Organic Agricultural Supply Chain," Sustainability, MDPI, vol. 11(3), pages 1-34, February.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:848-:d:203939
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    Cited by:

    1. Qian Zheng & Manman Wang & Feng Yang, 2021. "Optimal Channel Strategy for a Fresh Produce E-Commerce Supply Chain," Sustainability, MDPI, vol. 13(11), pages 1-24, May.
    2. Adrián Csordás & István Füzesi, 2023. "The Impact of Technophobia on Vertical Farms," Sustainability, MDPI, vol. 15(9), pages 1-17, May.
    3. Jun Wang & Song Yao & Xinman Lu & Yu Li, 2019. "Organic Food Labeling and Advertising: A Tripartite Game Model between One Supplier and Two Heterogeneous Manufacturers," Complexity, Hindawi, vol. 2019, pages 1-14, November.
    4. Nguyen Thi Nha Trang & Thanh-Thuy Nguyen & Hong V. Pham & Thi Thu Anh Cao & Thu Huong Trinh Thi & Javad Shahreki, 2022. "Impacts of Collaborative Partnership on the Performance of Cold Supply Chains of Agriculture and Foods: Literature Review," Sustainability, MDPI, vol. 14(11), pages 1-28, May.
    5. Lingyu Gao & Xiaoli Wang, 2019. "Healthcare Supply Chain Network Coordination Through Medical Insurance Strategies with Reference Price Effect," IJERPH, MDPI, vol. 16(18), pages 1-23, September.

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