Perishable food supply chain coordination with multiplicative demand function of price, shelf-life duration, and green technology investment under revenue-sharing contract

In the proposed study, an inventory model of a two-echelon green perishable supply chain which consists of one manufacturer and one retailer is investigated. The produced items have a deterministic shelf life and will be removed from the shelves when they reach to their expiration date. A novel formulation of the demand function is also presented, which is a multiplicative function of time after replenishment, retail price, and green improvement level. The formulated demand function increases with the time to expiration and the green improvement degree; it also decreases with the retail price. The mentioned characteristics in this supply chain are derived from the industries of selling fruits, vegetables, meat and poultry, as well as dairy products. The manufacturer is considered the leader of the Stackelberg game, and three approaches are proposed to solve the inventory model: Decentralized, Centralized, and Coordinated by the revenue and green technology investment cost sharing contract, which guarantees more profit for each member than the decentralized decision-making approach. The numerical results demonstrate that the proposed revenue-sharing contract could successfully help the supply chain members to achieve the potential supply chain profit in the centralized approach. A comparative study is also conducted to show the differences between implementing and not implementing green technology investments, which shows the profitability of making green technology investments when consumers have green preferences. It was observed that as the reservation cost increases, the importance of investments in green technology will increase for both parties. Also, with high potential market demand, it is more beneficial to invest in green technology. This study deals with a contribution to the formulation of the demand function, as a novel multiplicative function of time after replenishment in the form of power function, and retail price and green improvement level in the form of complementary linear function.