Third party logistics coordinating contracts for low value perishable products with loss dependent on logistics effort levels
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    Abstract:

    For a low value perishable product,product losses in the logistics process and logistics service prices have important influences on the decisions of both order and selling price.This paper focuses on the optimization and coordination problems in an outsourcing logistics channel where the quantity and quality losses of a client enterprise’s product depend on the logistics effort levels selected by a Third Party Logistics Service Provider (TPLSP) .A dynamic game model is established to analyze the decision conflicts under a traditional unit pricing contract where the TPLSP sets logistics effort levels and service prices,and the client enterprise chooses the product order quantity and selling prices.Results show that the decision conflicts lead to distortions of both order quantity and selling price,and further result in suboptimal channel performance,but do not cause effort level distortions.To resolve the problem,a revenue and effort cost sharing contract is designed and the contract terms to achieve perfect channel coordination and a win-win outcome are identified.Finally, computational studies show the effects of effort levels on the product’s quantity and quality losses have important influences on the decisions of each firm and the integrated system,and the channel performances.

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  • Online: April 17,2018
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