Pricing problem in a medical waste supply chain under environmental investment: a game theory approach

Abstract

ABSTRACT This study examines the pricing and environmental investment problem for a medical waste supply chain, including waste generators, contractors, and disposal facilities. Unlike prior studies, different game structures are considered to study the interaction between supply chain players. The models are formulated using nonlinear optimization. To maximize supply chain players’ total profit, an analytical and closed-form approach is applied to determine the best service price and environmental investment. The numerical illustration confirms that investment in environmental factors increases the total profit of supply chain partners and an optimal extent exists. Medical waste generators are also willing to pay more to firms that incorporate environmental aspects into their disposal operations. Furthermore, according to the sensitivity analysis, the decision-making power of the contractor has no significant impact on its profitability.