Coordination of social responsibility and order quantity in a two-echelon supply chain: A collaborative decision-making perspective

Abstract

Regarding globalization growing trend and sustainability concerns, the need for paying attention to the issues of corporate social responsibility (CSR) not only applies to individual firms, but also extends to the whole supply chain (SC) networks. Assisting CSR issues in one individual firm will thoroughly influence other supply chain members. In this paper, a supplier-retailer SC is considered in a newsvendor setting. It is possible for the supplier to invest in CSR activities which could improve the popularity of products and, subsequently, market demand. Firstly, both members' decisions under decentralized and centralized decision-making models are investigated; afterwards, a novel collaborative model is proposed to determine optimal order quantity and CSR investment, thus maximizing the whole SC profits and also motivating members to participate. Finally, the results of decentralized, centralized, and collaborative models are compared and some managerial insights are provided. Numerical experiments indicate that, under some circumstances, alongside the increment of SC profits, more CSR investment and better CSR performance level will be achieved through the collaborative model than other decision-making structures.