Fresh-Product Trade Management under Government-Backed Incentives: A Case Study of Fresh Flower Market.

This paper studies the impact of governments incentives on a fresh-product supply chain (FSC) system with a stochastic multifactor-dependent demand. The investigated supplierbuyer chain is modeled using two different approaches including: 1) the traditional selling cycle (TSC) in the open market without considering the governments incentives; and 2) the modern selling cycle (MSC) in the organized market considering the governments incentives. In the TSC approach, a Stackelberg game model is proposed for deteriorating products by considering the shortage inventory, the leftover inventory, and value-added tax (VAT) plan. The stochastic demand is dependent on the retail price, freshness degree of the fresh-product item, and marketing efforts. To develop a model for the MSC approach, we have extended the model of a TSC approach considering the governments incentives including short-term tax breaks and a single-window system. Finally, the proposed models are approved with a dataset from a real-life case study. The results show that the governments incentives increase the profit of all the FSC members under the MSC approach. Moreover, the results of conducted sensitivity analyses help governments to accurately adjust the VAT rate and commission percentages in TSC and MSC approach, respectively.