Responding to consumer environmental awareness: A variational inequality approach to green manufacturing optimization

Abstract

In response to increasing consumer environmental awareness, our study introduces a sustainable supply chain optimization model that stimulates competition among multiple green manufacturers within an uncertain market context. Each manufacturer crafts a selection of products showcasing various degrees of greenness, purposefully designed to meet the expanding demand of environmentally conscious consumers. This strategic model emphasizes profit maximization for green manufacturers, necessitating the definition of ideal greenness levels and production quantities for an array of product types. By employing variational inequality theory, we transmute the preliminary optimization model into an interconnected variational inequality problem. We propose an improved Euler algorithm, a proficient tool for attaining equilibrium solutions. Empirical scenarios inspired by the electric vehicle industry lend credibility to our model, indicating that the surge in consumer environmental awareness compels manufacturers to diversify their offerings and accentuate their products’ greenness levels. Intriguingly, the research suggests that escalating competition can incentivize manufacturers to elevate their products’ greenness levels, strategically countering potential profit erosion. In addition, the study reveals that intensifying consumers’ green utility sensitivity doesn’t invariably augment demand for manufacturers, even with significant improvements in product greenness. This paradox highlights the necessity for manufacturers to strategically adjust their production approaches in light of varying consumer preferences. Moreover, when the level of consumer environmental awareness achieves a certain level, the fierce competition might not always be harmful to some manufacturers and the industry if they can adopt effective strategies to improve green utility sensitivity.