Impact of green retail operations on the profit of the manufacturer and the retailer under different pricing strategies

Abstract

The increasing customer awareness of environmental sustainability has motivated retailers to engage in green practices. In this paper, we consider a retailer involved in green retailing operations under a dual-channel supply chain framework under which the manufacturer is selling through an e-marketplace and a retailer. We investigate the impact of green retailing operations on the profit of the supply chain members for consistent pricing strategy and inconsistent pricing strategy using a non-linear demand function. We resort to a bi-level genetic algorithm for the solutions. Through a numerical example, we have quantified the profit of the chain members and assessed the impact of the retailer’s engagement in green retail operations on the profit of the chain members. We have also carried out a sensitivity analysis of the profit of the chain members for the rapidly evolving customer preference for e-marketplace. From the numerical illustration, we found that (1) it is beneficial for the retailer to engage in green retail operations irrespective of the pricing strategy (2) retailer’s engagement in green retail operations reduces the profit of the manufacturer regardless of the pricing strategy of the retailer.