The community group buying models and strategic management for fresh food under supply uncertainty

Abstract

This paper explores a community group buying fresh food model with one supplier, one platform and one community leader, where the platform adopts full payment pre-sale model, and the supplier has uncertain supply. We establish profit models for the centralized decision, decentralized decisions and semi-integrated decisions, and obtain management strategies. For decentralized decision-making, we introduce two kinds of wholesale price contracts considering shortage undertaking, and propose a new form of minimum commitment supply contract which enables the platform to obtain the supplier’s compensation for the shortage loss caused by uncertain supply and transfer part of it to the leader. Compared with traditional wholesale price contracts, we prove that the minimum commitment supply contract can coordinate the overall profit of the supply chain and enhance the effort levels of the members. This numerical study shows that whether the average supply is sufficient or short, the optimal decisions and the expected profit of each member of the supply chain increases with the decrease in supply uncertainty.