Optimal pricing and greening decision in a manufacturer retailer dual-channel supply chain

Abstract

Abstract In the current situation of globalization, the management of a dual-channel supply chain is a significant phenomenon to mark up a conflict between an online channel and traditional retail channels. Decisions of the green level of the product towards the dual-channel supply chain are beneficial for the growing tendency of a company. In this paper, we have generalized a single manufacturer and single retailer two-echelon dual-channel green supply chain. The manufacturer produces the product considering an arbitrary level of the greenness and then sells it through 1) a traditional retail channel and 2) an online channel. Demand in both the retail channel and online-channel is sensitive to price and level of the greenness of the product. The profit maximization SC model has been generalized under two decision-making structures. At first, a centralized decision-making structure is analyzed and the optimal decisions of SC members are exhausted. Secondly, we propose a decentralized decision-making structure to find the optimal selling price and level of greenness. The Stackelberg-game approach has been used to solve the decentralized scenario. This study provides the supply chain literature by coordinating environmental decisions on the dual-channel supply chain system. According to the numerical findings and sensitivity analyses, the centralized scenario is more profitable compared to the decentralized scenario. Finally, some managerial applications are derived based on the sensitivity of some key parameters.