Low carbon joint strategy and coordination for a dyadic supply chain with Nash bargaining fairness

Abstract

<p style='text-indent:20px;'>In the paper, fairness concern criterion is utilized to explore the coordination of a dyadic supply chain with a fairness-concerned retailer (acting as a newsvendor), who is committed to low carbon efforts. Two models are developed for stochastic demand disturbances in the forms of multiplicative case and additive case, respectively. Firstly, the optimal joint decision of the retailer and the supply chain are proposed in two scenarios, i.e., decentralized decision and the centralized decision. Secondly, in order to realize channel coordination, the contract of revenue sharing combined with the mechanism of low-carbon cost sharing is designed. Moreover, the influences of the retailer's fairness concern and bargaining power on the joint decision and the contract parameters are also investigated. Finally, numerical examples are given to illustrate the theoretical results and some suggestions to supply chain management are also provided. The results show that the revenue sharing contract can make the supply chain achieved coordination with the cost sharing mechanism of low-carbon efforts. Furthermore, the optimal low-carbon effort level and ordering quantity decrease in terms of fairness-concerned parameter and Nash bargaining power parameter, which increases in unit cost. However, the optimal pricing makes the opposite change.</p>