Pricing and Coordination Strategy in a Green Supply Chain with a Risk-Averse Retailer

Liyan Wang,Minghai Ye,Shanshan Ma,Yipeng Sha

doi:10.1155/2019/7482080

Abstract

This paper addresses the pricing and coordination strategy in a green supply chain in which a manufacturer produces a green product and sells it to a risk-averse retailer. The product’s demand is a random variable influenced by the green level and the retail price. The problem is modeled in three different structures, a centralized and two decentralized models, in which the upstream manufacturer and the downstream retailer act as the channel leader, respectively. This paper presents the optimal decisions for all supply chain members, analyzes the effects of green degree and risk-averse coefficient on the supply chain members’ decision-making and their profits, and performs the numerical analysis. The results show that the green degree and the whole supply chain’s expected profits are highest in the centralized scenario, followed by the retailer-led scenario, and lowest under the manufacturer-led scenario; the green degree and the manufacturer’s expected profit increase with the risk-averse coefficient, no matter who dominates the channel; however, the risk-averse coefficient’s effects on the retailer’s expected utility and the retail price depends on who dominates the channel and on the greening investment parameter.

Highlights

With rapid economic development, the environment has deteriorated markedly [1]
Stringent legal requirements and growing public awareness of environmental protection have prompted leading global businesses to collaborate with their partners to establish sustainable supply chains [4]
Lenovo helps its partners commit to green business activities from operations and recycling. e significance of green supply chains and increasing attention on sustainable supply chain coordination has made it essential for both practical managers and academicians to consider green supply chain coordination in their management decisions and research

Summary

Introduction

The environment has deteriorated markedly [1]. Governments and environmental protection agencies have issued a series of laws and regulations to encourage enterprises to resolve the problems of environmental deterioration and resource exhaustion [2]. The overall goal of Hewlett Packard is to realize a 10% reduction in greenhouse gas emissions related to suppliers by 2025, as compared to 2015 (http://www.sohu.com/a/ 276053081_818836) Another practical example of green supply chain coordination is found in the computer business. (3) How does the risk aversion coefficient affect the supply chain members’ decisions and their profits? To answer these questions, we consider a scenario in which the manufacturer produces one brand of environmental green product and sells it through a risk-averse retailer. Is paper contributes to the literature by examining green supply chain coordination considering the retailer’s risk aversion.

Literature Review

Models

Findings

Green Supply Chain Coordination