Strategic Analysis of a Dual Channel Green Supply Chain with Return-Refund Facility

Abstract

Due to the advancement of online marketing, many manufacturers have started to provide a return policy with refund agreements. This paper concerns return policy in a dual-channel supply green chain, wherein customers can buy the products through a traditional retail channel or direct online channel. Under sustainable improvement, we have developed the dual-channel supply chain system with a return strategy including refund via direct online channel. Market demand is dependent on product sales price, green label, and refund amount. Firstly, the supply chain members target to optimize their decision variables under a centralized decision model. Secondly, the entire supply chain members make their decision individually to maximize the overall profit using the non-cooperative Stackelberg game approach. The prime objectives of the paper are to find out the optimal sales price, wholesale price, green label, and refund price so that the profit of the supply chain will be maximized. By solving the game model, we compare the optimal decision under both scenarios and implement sensitivity observation, which helps to reflect the influence of critical parameters.