Green initiative in a two-echelon Supply chain with co-ordination and contract

Abstract

In recent times, environmental responsibility is an important factor that determines the success of a Supply Chain. In this study, we have considered green production in the light of various co-ordinations and contracts. This is a two-echelon Supply chain consisting of one manufacturer who designs and develops a green product and the retailer sells it to the environmentally aware customers and the awareness is converted to actual purchasing behaviour by the retailers marketing strategy and the manufacturer’s product design and development which includes technology usage to develop the greenness,packaging and several other factors which were not studied earlier. All these factors are involved in our demand function which is distinct from the existing literature. The model is developed under three contracts, Price-only, green marketing cost sharing and two-part tariff contracts. This is an well-established fact that co-ordination enhances the economic benefits to every tier member of a chain. Our findings also establish that co-ordination and co-operation among members will enhance their environmental sustainability. In this way they can carry out their social responsibilities towards our environment. It is also noticed that as the environmental consciousness of the consumers increases, the cost sharing contract is more profitable for manufacturer than that for retailer whereas the price only contract is profitable for the retailer.