To address the issue, we devise a linear-bonus scheme and demonstrate its effectiveness in dynamically motivating an optimal level of the producer's freshness-keeping effort. This will jeopardize the goodwill of the retailer afterwards. In particular, the producer may abandon the effort and leave the product to deteriorate naturally after the transaction. We show that in decentralized decision mode, the optimal levels of both freshness state and effort decrease significantly because of the shrink in the profit margin.

The retailer decides the optimal level of advertising effort, while the producer decides the optimal freshness-keeping effort. Having received the orders from its online platform, the retailer will procure the product from the producer, who will be responsible for the delivery of the product to the retailer. In this paper, we propose a dynamic control model comprising an online retailer and an off-line producer, who collaborate to deliver a fresh product to their customers. However, due to concerns about the recovery of the costly investments in the freshness-keeping actions, the members of the supply chain may not fully engage in the actions. Seamless collaborations in freshness-keeping actions among supply chain members are critical to ensure that the product is delivered with the desired level of freshness. A fresh product deteriorates over the finite time horizon and may lose its intended commercial value due to delays in transportation or improper management of temperature in its production and distribution.

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