New Retailing Problem for an Integrated Food Supply Chain in the Baking Industry

Abstract

As coronavirus disease 2019 (COVID-19) continues to spread, online consumption habits in China have changed significantly. Thus, the booming online-to-offline (O2O) food ordering and delivery industry via the online bakery have been changing customers’ food shopping behavior. This article proposes a comparison relying on advanced O2O strategy for a single-vendor-single-retailer integrated system. Three coordination mechanisms consist of revenue-sharing, buy-back, and quantity flexibility contracts have been employed for optimizing the order quantity. Replenishment strategies and temperature for the supply chain members are considered based on the new retailing framework. Herein, the authors suggest an algorithm for the computation of the optimal solution. Lastly, numerical examples and sensitivity analysis are also conducted to clarify the usefulness of the proposed model in the food supply chain. Sensitivity analysis revealed a number of managerial insights. For example, the results obtained under O2O operations can be compared with those obtained under online/offline operations (under various parameters settings) to determine an opportune moment for three coordination mechanisms.