Agricultural Supply Chain Options Ordering and Coordination Considering Fairness Concerns and Sales Effort

With the accelerated modernization of China’s agriculture and the rapid growth of the agricultural consumer market, supply chain management of agricultural products is of great interest. As the behavior of supply chain members such as sales effort and fairness concerns can have a great impact on the overall supply chain management decisions. Therefore, in this paper, we introduce options contracts to investigate the ordering and coordination strategies of a single-cycle two-stage agricultural supply chain considering that the agricultural retailer is a fair concern and provides sales effort. The results show that in the case where the retailer only orders options, there is a relationship between the effect of the retailer’s fair concern on order quantity and the parameters of the option contract, with the retailer’s order quantity being an increasing function of fair concern when the option price is less than a critical value, and a decreasing function in the opposite case. In addition, by discussing the supply chain coordination mechanism, it is found that the level of retailers’ fairness concern does not change the coordination of options contracts and that under certain conditions, supply chain coordination can be achieved. The results of the study provide some meaningful suggestions for agricultural supply chain management.