Supply chain coordination of counter-seasonal fresh produce under the farmer’s overconfidence

Abstract

This paper examines a counter-seasonal fresh produce supply chain considering the farmer’s overconfidence. The market demand expected by the farmer depends on freshness-keeping effort and the level of the farmer’s overconfidence. The “ cost-sharing and two-part tariff ” hybrid contract is supposed to tackle the negative impacts of the farmer’s overconfidence on supply chain members and to realize system coordination. The findings of the study are as follows: (1) Complete overconfidence increases the gap between retailer profit growth rates and farmer profit growth rates, and consumer quality sensitivity does not always positively affect the profits of the overconfident farmer, which depends on the degree of farmer overconfidence. (2) The freshness-keeping effort level and price decisions are all positively associated with the farmer’s overconfidence, and when the farmer’s overconfidence surpasses a specific threshold, decentralized decisions will have a greater freshness-keeping effort level than centralized decisions. (3) Adopting the “ cost-sharing and two-part tariff ” hybrid contract mitigates the negative effects of overconfidence on members’ returns, achieves the Pareto zone within a certain range of transfers, and provides better coordination than a single contract.