Information sharing in a green supply chain with promotional effort

Abstract

PurposeThe purpose of this paper is to investigate the retailer’s strategy of information sharing in a green supply chain with promotional effort, and the impact of information sharing on the decisions and profits of the manufacturer and the retailer.Design/methodology/approachThe developed models aim to maximize the profits of the manufacturer, the retailer and the green supply chain system. The game theory is used to obtain the equilibrium solutions of both the manufacturer and the retailer. A two-part compensation (TPC) contract is designed to motivate the retailer to share information with the retailer. Numerical examples are used to show the impact of parameters on decisions by Matlab 2014.FindingsThe results show that the green degree increases while the promotional effort level decreases when the manufacturer receives the larger demand information from the retailer; information sharing leads to a profit increase to the manufacturer and a profit loss to the retailer, but can increase the profit of supply chain under a certain condition; information sharing reduces the expected consumer surplus. The TPC contract designed in this paper can not only motivate the retailer to share information but also increases the consumer surplus.Research limitations/implicationsThe study has been done in a monopoly environment where only a retailer can forecast demand information. It is an interesting direction of future research when considering there are more retailers who can forecast such information in a supply chain.Originality/valueThere exist two main aspects that are different from the existing literature. The stochastic demand function related to the retail price, the green degree and the promotional effort have never appeared in previous literature. This paper considers a green product supply chain with a manufacturer who produces green products and a retailer who has an information advantage because of her promotional effort; this paper investigates the impact of information sharing on the consumer surplus and designs a contract to coordinate the green supply chain.