Optimal decisions in a dual-channel competitive green supply chain management under promotional effort

Abstract

The awareness of the environment has been extensively studied in the past decade. In this study, the production of eco-friendly and comparatively less harmful green innovative products is considered under an uncertain environment to reduce their detrimental effect on the environment under green supply chain management. Owing to the complexity of green innovation, the various pricing decisions of the players, green innovation level, and promotional effort under the centralized, manufacturer Stackelberg, and vertical Nash policies are studied. The relations among the parameters are analytically investigated such that the profits are optimized for various cases. The optimal level of green innovation, promotional effort, prices, and profits are achieved by varying the market potential and price parameters. It is also observed that the cost coefficients of green innovation and promotional effort have the highest effect on the optimal level. Green innovation is very effective in improving the players’ profit margin, and the manufacturer must decide the extent of green innovation to optimize the profits. The optimal level of the promotional effort for the various cases is determined such that the players can gain the most. It is found from the study that a dual-channel supply chain is more efficient than a single-channel supply chain for green products.