Effects of constrained supply and price contracts on agricultural cooperatives

Planning strategies depend in part on the supply flow structure of a supply chain. In food supply chains, many firms are constrained by raw material supply (e.g. vegetables and milk). This paper first examines the economic consequences of constrained supply in agricultural cooperatives. Secondly, it deals with the effects of adding price contracts to the current cooperative contract. This model combines an inventory policy approach and a Monte-Carlo simulation, to take into account price uncertainty. We illustrate our results using the case of a dairy cooperative.