A Game-Theoretic Framework for Analyzing the Impact of Social Responsibility and Supply Chain Profitability

Abstract

Supply chain collaboration plays an important role in profit maximization. Contract coordination is a successful strategy for collaboration and profit-sharing in supply chains. The study of contract coordination in supply chains under uncertainty and stochastic environmental conditions has attracted the attention of many researchers. We propose a single-period newsvendor model with one manufacturer and one retailer in the supply chains. The proposed model considers two variables, including order quantity and investment in corporate social responsibility, where the demand is stochastic and follows a normal standard distribution. The model considers quantity flexibility, advanced purchasing discounts (APDs), and buyback contracts under cooperative conditions. Numerical examples are used to exhibit the applicability of the model under various conditions, including the two-demand distribution and three coordination contracts. We demonstrate an ideal scenario where the APD contracting results in the most overall supply chain profit and increases for each supply chain partner.