Competitive Environment Between Green and Non-green Products Considering Disruption and Alliance Strategy

Abstract

Nowadays, the effective supply chain is considered more than ever. In this study, a supply chain composed of a dominant retailer and a non-green product supplier is investigated. Base demand is always fluctuating in the real market. Thus, considering the base demand disruption risk is one of the factors approaching the problem to reality as discussed in this model. Then, the retailer encounters the challenge of entering a new supplier producing the substitutable product of the first product. New supplier produces the green product. Thus, the competition of green and non-green products in this study is considered with other factors. Another challenge for retailer is the type of optimal alliance, determining the optimal green degree of the second product, and determining the optimal refund amounts. In this study, some factors such as base demand disruption risk, green product, alliance selection, and return policy are considered. A game theory approach is used for solving the problem and getting optimal decisions. Finally, some sensitivity analysis based on the alliance strategies and greenness of the SCM has been done by numerical examples.