Coordination of Perishable Product Supply Chains with a Joint Contract under Yield and Demand Uncertainty
Round 1
Reviewer 1 Report
Literature review need to be extended
the topics on decentralized, centralized, ... need to be extended
Research questions should be stated clearly
What is research methodology -explain more
Model validation and future research based upon the current research are in need of expansion.
Author Response
Reviewer: 1
Comments and Suggestions for Author
- Literature review need to be extended
Response: Thanks for the reviewer’s comments. The literature review is revised and extended in the manuscript.
- the topics on decentralized, centralized, ... need to be extended
Response: The parts of the topics on decentralized, centralized, ...are revised in the manuscript.
- Research questions should be stated clearly
Response: We study a problem of perishable products supply chain coordination which consists of one manufacturer and one retailer. The demand and the yield in the supply chain are both uncertain. We propose a joint contract combined revenue sharing with quantity discount to coordinate the supply chain.
- What is research methodology -explain more
Response: Due to the characteristics of perishable products and the preferences of target consumer groups, such products have long production lead time, short life-cycle, large demand uncertainty and low residual value of unsold products at the end of the period. We establish a two-stage perishable products supply chain model based on the newsboy model, the stochastic demand of the supply chain obeys normal distribution, and the rate of production obeys uniform distribution. Then we optimize the quantity of product ordered and the quantity of raw materials devoted in the centralized model and the decentralized model respectively. We propose a joint contract by comparing the optimal decisions in the decentralized and centralized model afterwards. Finally, we provide numerical analysis to validate the impacts of uncertainties in the supply chain’s profit and decisions, and the effectiveness of the contract.
- Model validation and future research based upon the current research are in need of expansion.
Response: Model validation has been extended in the manuscript, and the tables and figures are shown after the references. Future research based upon the current research is revised as ‘This research can be extended by considering a dual-channel perishable products supply chain which has two channels for sale, there are more than one manufacturer sell the products and it will be interesting to analyze the retailer’s decision about the price. Our analysis may be possibly extended to a close-loop perishable products supply chain which takes the unsold products such like electronics for recycling. On the other hand, we can consider more factors related to the demand and yield, such as sales efforts, quality efforts, R&D investment, the weather and the green degree. It’s also meaningful to study the influence of emergencies on the perishable products supply chain coordination with the increase of the frequency and intensity of emergencies in recent years. Our future work will be directed towards these aspects.’
Author Response File: 
Author Response.pdf
Reviewer 2 Report
Some typo errors are present in the paper. In several parts, the following message is shown: n Error! Reference 490 source not found.
The introduction section is too long. Some parts can be used in the literature review. The methodology can include a few more sentences….
Author Response
Reviewer: 2
Comments and Suggestions for Author
- Some typo errors are present in the paper. In several parts, the following message is shown: n Error! Reference 490 source not found.
Response: Thanks for the reviewer’s comments. It has been revised and marked red in the paper.
- The introduction section is too long. Some parts can be used in the literature review. The methodology can include a few more sentences….
Response: The introduction section is revised in the manuscript. The part of methodology in the manuscript is revised as ‘This paper considers the issue of coordination for a two-stage perishable products supply chain, which consists of one manufacturer and one retailer. The manufacturer decides Q (the devote quantity of raw materials), the retailer decides L (the quantity of the raw materials devoted) and w (the wholesale price of the product). When the market demand is greater than the supply at the end of the cycle, a shortage cost will occur. Conversely, retailers will convert superfluous product to salvage value due to the characteristics of perishable products. When the quantity of production ordered by the retailer is more than that produced by manufacturer, the manufacturer replenishes the goods from the secondary market. The coordination of supply chain becomes very complicated in the face of the dynamic environment. We suppose the stochastic demand (X) of the supply chain obeys normal distribution, and the rate of production (Y) obeys uniform distribution. Then we optimize the quantity of product ordered and the quantity of raw materials devoted in the centralized model and the decentralized model respectively. We propose a joint contract by comparing the optimal decisions in the decentralized and centralized model afterwards.’
Author Response File: Author Response.pdf
Reviewer 3 Report
See the file attached.
Comments for author File: Comments.pdf
Author Response
Reviewer: 3
Comments and Suggestions for Author
- The term “perishable products” in the title is confusing. This suggests that
products have a limited shelf life of more than one period. The literature on
perishable products is quite specific and this paper does not belong to this
stream as it only studies a single-period problem.
Response: Thanks for the reviewer’s comments. Perishable products can be divided into the following types: perishable products determined by the physical and chemical characteristics of the product itself, such as perishable food, fruits, flowers, drugs, etc.; Perishable products produced with the influence of human holiday culture, trend culture or major events, such as Mid-Autumn moon cakes, New Year cards, fashion, news and current affairs newspapers and magazines, etc.; A number of high-tech perishable products, such as semiconductors and electronics for digital communications, that are driven by technological advances and escalating consumer demand. Perishable products have obvious characters of short sales cycle, low residual value of unsold products in the end of period and uncertainty demand. This paper studies perishable products supply chain with such characters in a single period. At the end of the period, the inventory cost for the perishable products is usually higher than their residual value. We considered the characters of perishable products when we established the model of the two-stage supply chain.
- Literature Review: The authors do not provide a good overview of existing
literature. There are already papers studying supply chain coordination problems
with random yield. For example, the paper Inderfurth and Clemens (2014), study
a quite similar problem.
Inderfurth, K., & Clemens, J. (2014). Supply chain coordination by risk sharing
contracts under random production yield and deterministic demand. OR
spectrum, 36(2), 525-556.
Response: The overview of existing literature has been revised and marked in the paper. Inderfurth and Clemens study a supply chain problem under random production yield and deterministic demand. It studies wholesale price contract, over-production risk sharing contract and penalty contract in different conditions. We all study the supply chain coordination problems, but the demand of the market faced by the supply chain and the coordination contract we proposed are different. In our study, the yield and the demand are both uncertain. We propose a joint contract combined revenue sharing contract with quantity discount contract considering the manufacturer is risk neutral and the retailer has limited funds.
- P.1, l. 38: What is 0-00?
Response: It has been revised as ‘The common approaches are using influence parameters such as price, sales efforts, quality efforts and so on [1-3].’
- P.2, l. 99: The subsection 2.1 Supply Chain Uncertainty is not precise enough.
With this title, there would be several hundred of papers. Do the authors mean
“Yield uncertainty”? In general, the authors do not provide a good state-of-the-art
literature. As I mentioned above there is already literature on supply chain
coordination with random yield. The authors should focus on this stream and
should highlight to what extent their paper provides additional insight. The
perishable-product literature is not needed.
Response: This paper focus on demand and yield uncertainty in supply chain, it has been revised as ‘Supply chain demand and yield demand.’ We have reviewed the literature on supply chain coordination with demand and yield demand and provided additional insight in the manuscript. The perishable product literature has been removed.
- P.4, l. 203: The integral should be dy and not dx. However, I do not think the
specific formulas for the expected value are not necessary. This is common
sense. I would recommend to change ?? and ?? into ?? and ?? to clearly connect
to the random variables X and Y.
Response: It has been revised as ‘ : The mean value of the stochastic demand, ’ and ‘ : The mean value of the production rate, ’.
- P. 4, l. 195 and 200: Change the random variables to ? and ? instead of ? and ?.
The latter two characterize realizations while the first two variables are random
variables. These are different mathematical constructs.
Response: It has been revised and marked red in the paper. It has been revised as ‘X: The stochastic demand when the retail price is p’ and ‘Y: The stochastic demand when the retail price is p’.
- P. 5, l. 212: What does the “0” at the end of the line mean?
Response: There is an error in reference insertion. It is revised as ‘The retailer's demand is stochastic, which obeys normal distribution. The manufacturer's yield is random, the production rate obeys uniform distribution ， ， [21]’.
- Section 4: Centralized model: I do not think that a centralized decision-maker has
to optimize ?. For realistic cases only ? should be determined. I do not think
there is a need for finding Q. Could the authors comment on this.
Response: Q, L and w are all decision variables. In centralized model, Q and L are decision variables which influence the profit of the supply chain a lot. Our target is to maximize the entire profit of the supply chain in centralized model. So, we have to optimize both Q and L. However, w only affects the benefits of each member in the supply chain and has no impacts on the profit of the entire supply chain. Therefore, it does not make sense to optimize w in centralized model. Hu et al. [1] and He et al. [2] both optimize Q (The quantity of the product ordered by the retailer) and L (The quantity of the raw materials devoted by the manufacturer) to increase the profit of the supply chain in centralized model.
[1] Hu F.; Lim C.C.; Lu Z.D. Coordination of supply chains with a flexible ordering policy under yield and demand uncertainty. Int. J. Prod. Econ. 2013, 146, 686-693.
[2] He Y.; Zhao X. Coordination in multi-echelon supply chain under supply and demand uncertainty. Int. J. Prod. Econ. 2012, 139, 106-115.
- P. 7, l. 283 and 284: Should it be Π? (NOT Π?)? It is the retailer’s function.
Response: It has been revised and marked red in the paper.
- P.7, l. 300: This is confusing. ?(?) was defined as the c.d.f of the random
demand (see p. 4, l. 195). How can ?(?) be the ordinary failure rate of the
demand distribution. This does not make sense.
Response:
When , , Lariviere and Porteus. [3] term P(?) the generalized failure rate (IGFR), a distribution has an increasing generalized failure rate if P(?) is weakly increasing for all x. The usual distributions of demand all meet the condition of IGFR, such as uniform distribution, normal distribution, exponential distribution and so on. When the demand distribution ?(?) meet the condition of IGFR, the expected profit of the manufacturer is a concave function. Which proves that there is a unique w which can maximize the profit of the manufacturer [4].
[3] Lariviere, M.A.; Porteus, E.L. Selling to the newsvendor: An analysis of price-only contracts. Manuf. Serv. Op. 2001, 3, 293-305.
[4] Cachon G P. The allocation of inventory risk in a supply chain: Push, pull, and advance-purchase discount contracts[J]. Management Science, 2004, 50(2): 222-238
Author Response File: Author Response.pdf
