Green Supply Chain Coordination Considering Yield Uncertainty Under Different Power Structures

Abstract

The problem of environmental resources has promoted consumer demand for green products. This paper builds a green supply chain consisting of a manufacturer and a retailer. In the supply chain, we assume that the manufacturer makes green R&D investments but faces yield uncertainty and the retailer makes sales efforts to attract more consumers to buy green products. At the same time, there are different power structures between the manufacturer and the retailer. Therefore, in order to find how the green supply chain operates in these structures, we built four game models, and they are the manufacturer-led model, the retailer-led model, Nash Equilibrium model and the centralized model, respectively. Moreover, we analyze and compare the optimal wholesale price, the green degree of the product and the optimal order quantity in four game models. We find that the optimal wholesale price is the highest in the manufacturer-led model, but the optimal green degree of the product and order quantity is the lowest. Then, we design the cost sharing contract to coordinate the supply chain. It can improve the green degree of the product, the profit of the retailer and the manufacturer through numerical analysis. Finally, this paper will offer managerial insights, which can help managers better evaluate which market structure is more profitable.