Optimal control of a quality supervision profit model for the electronic intermediary

Online customers execute transactions without inspecting products could expect to encounter risks of receiving products with unsatisfactory qualities, especially in food transactions. Thus quality supervision plays a key role in the establishment of trust as well as in the management of risk between online customers and sellers. Most papers in this field are in qualitative nature. In this paper, a quality supervision profit(QSP) model is formulated as a discrete-time optimal control problem. It is a quantitative approach, and it broadens the scope of current research in the area. The quality effort level of online sellers(QELs) and the quality supervision level of the electronic intermediary(QSLm) are considered together with their corresponding profit in the proposed model. The aim is to optimize an overall profit. A case study arising from Suichang's food traceability system(FTS) of farm produce online transaction is carried out in details. The results reveal that QELs, QSLm and the profit distribution coefficient have a strong influence upon the profits of both sides. Finally, some concluding remarks,including potential further research topics, are given.