Abstract
With the rising environmental concerns among consumers all over the world, sustainability has received considerable attention, and numerous enterprises are adopting various practices such as investing in energy-saving to improve sustainability in supply chains. However, many previous researches always assume that decision makers are perfectly rational and neglect the behavioral concerns of decision makers. This paper considers a two-stage sustainable supply chain with behavioral concerns in order to develop more realistic models, and mainly focuses on the energy-saving and pricing decisions in the decentralized system, as well as how to improve energy-saving level and profits. We develop decentralized decision-making models under two types of behavioral concerns: fairness concern and risk aversion, and derive the optimal strategy for each member with a Stackelberg game in which the manufacturer acts as the leader. The effect of the behavioral concerns on the optimal decisions and corresponding profits is discussed in detail. Theoretical analysis verified by numerical experiments shows that the fairness behavior always causes a negative effect on the manufacturer, total supply chain, and energy conservation, while it could benefit the retailer in profits. The risk aversion behavior always benefits the manufacturer, total supply chain, and energy conservation, whereas it could make the retailer suffer. Note that both the optimal energy-saving level and corresponding profit of the total supply chain under two types of behavioral concerns are lower than that in the centralized system, thereby we propose a revenue-cost-sharing contract to coordinate the supply chain, under which both the manufacturer and the retailer can achieve a win-win outcome and the energy-saving level can be improved. In addition, some managerial implications through our analytical and numerical results are summarized in this paper.
Highlights
IntroductionDuring the past few decades, a series of environmental disasters have been caused by drastic changes in climate and air pollution [1], and human survival environment is being severely
Many existing researches about energy-saving and pricing decisions assume decision makers are perfectly rational. Motivated by this observations and discussions, we study a sustainable supply chain composed of a socially responsible manufacturer who invests in technologies to improve energy-saving level and a retailer who involves behavioral concerns such as fairness concern and risk aversion
We find that the efficiency of energy-saving investment plays a very critical role in energy-saving and pricing decisions, and the change of the optimal equilibriums with respect to the coefficients of behavioral concerns depends on the efficiency of energy-saving investment
Summary
During the past few decades, a series of environmental disasters have been caused by drastic changes in climate and air pollution [1], and human survival environment is being severely. Many existing researches about energy-saving and pricing decisions assume decision makers are perfectly rational Motivated by this observations and discussions, we study a sustainable supply chain composed of a socially responsible manufacturer who invests in technologies to improve energy-saving level and a retailer who involves behavioral concerns such as fairness concern and risk aversion. We establish a performance benchmark by the centralized system, and obtain the system-wide optimal energy-saving level, retail price and corresponding profit. Energy-saving and pricing decisions in a sustainable supply chain considering behavioral concerns and corresponding profits in detail, and compare the optimal energy-saving level, retail price and corresponding profits under three cases: perfect rationality, behavioral concerns and centralized system. It is noted that whatever behavioral concerns the retailer involves, both the optimal energy-saving level and corresponding profit in the decentralized system are lower than that in the centralized system. The detailed proofs of propositions and corollaries in this paper appear in S1 Appendix
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