Green Product Supply Chain Coordination Under Demand Uncertainty

Chong Xin,Shuangrui Chen,Xin Chen,Meiqi Zhang,Haifeng Chen

doi:10.1109/access.2020.2963944

Chong Xin, Shuangrui Chen + Show 3 more

Open Access

https://doi.org/10.1109/access.2020.2963944

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Abstract

The problem of coordinating a two-echelon green product supply chain with environmentally conscious consumers under demand uncertainty is studied in this paper. In the green product supply chain, a manufacturer produces green product through developing green technology and a retailer promotes the green product through green marketing. The demand of the green product is uncertain with the mean and the variance as the only known information. After analyzing the utility that a consumer gained from the green product, the problem is then formulated as a distribution-free-based Stackelberg game for a decentralized system under three contracts, i.e., wholesale price-only (WPO), revenue and green marketing cost-sharing (RGMS), and two-part tariff (TPTF) contracts. The analytical results are also proposed to show the effects of the system parameters on supply chain optimal decisions. By comparing with the centralized system, the coordination level for each contract is investigated. Numerical examples and sensitivity analysis with respect to several system parameters are presented to illustrate the effectiveness of the contracts under demand uncertainty. The results demonstrate that both RGMS and TPTF contracts are superior to WPO contract. Especially, TPTF contract can always coordinate the supply chain, while RGMS contract can improve the supply chain coordination level only if the revenue and cost sharing coefficients satisfy certain conditions.

Highlights

Over the last 30 years, due to the increasing requirements of the government and the public for environmental protection, supply chain sustainability has become one of the most important topics and received the most attention in both the industry and academy [1], [2]
To address the above questions, this paper considers a two-echelon green supply chain in which the manufacturer designs and produces the green product through developing green technology and the retailer promotes the product through green marketing
Different from the above literatures, this paper mainly focuses on the green supply chain coordination by using different contracts.we model the problem as a distribution-free-based Stackelberg game for a decentralized supply chain system, and derive the optimal decisions for the manufacture and the retailer

Summary

INTRODUCTION

Over the last 30 years, due to the increasing requirements of the government and the public for environmental protection, supply chain sustainability has become one of the most important topics and received the most attention in both the industry and academy [1], [2]. A global survey conducted among nine developed countries indicates that 50% of the respondents are willing to purchase green products, and 24% of them prefer to pay more on green products [4] Such result shows the close relationship between consumers’ environmental consciousness and supply chain sustainability. To address the above questions, this paper considers a two-echelon green supply chain in which the manufacturer designs and produces the green product through developing green technology and the retailer promotes the product through green marketing. Three contracts including wholesale price-only, revenue and green marketing cost-sharing, and two-part tariff are introduced, and the coordination level for each contract is investigated by comparing the performance of a decentralized supply chain with the centralized system.

LITERATURE REVIEW

MODEL DEVELOPMENT AND ANALYSIS

TWO-PART TARIFF CONTRACT

NUMERICAL EXAMPLE

Findings

CONCLUSION