Abstract
This paper focuses on coordination issues related to the green supply chain with capacity constraints and green marketing efforts. We build a two-stage green supply chain, in which the upstream manufacturer has a certain amount of installed capacity to produce green product, yet can expand its capacity through a Cloud Manufacturing (CM) Platform once its existing capacity becomes insufficient, while the downstream retailer expends green marketing effort to promote the green product. In particular, we analyze the interaction between the capacity expansion options of the manufacturer and the green marketing efforts of the retailer. Aiming to mitigate the inefficiency under a decentralized green supply chain, we design a contract that combines cost-sharing and revenue-sharing in green marketing in order to coordinate the supply chain. The results show that: (1) when the manufacturer’s existing capacity falls below a certain threshold, it will choose to expand its capacity. The threshold is related to existing capacity, capacity expansion cost coefficient, green marketing cost coefficient, and sensitivity coefficient of demand to green marketing. (2) Under low capacity, if the capacity expansion cost coefficient is large, a higher consumer environmental awareness or preference for green products will weaken the retailer’s motivation for expending green effort. (3) A contract for cost-sharing and revenue-sharing in green marketing can fully coordinate the green supply chain, whereby the two share proportions are equal and meet certain constraints.
Highlights
With the depletion of natural resources and the deterioration of the environment, environmental issues affect all human activities, and environmental protection and sustainability are receiving increasing attention [1,2,3]
Walmart needs to consider how to expend it marketing effort in order to promote the green products of its suppliers, who have already participated the green supply chain and make use of some kind of green technology [20]. Given this green technology, we focus on its capability to expand the capacity, which has often been overlooked in previous literature examining the green supply chain
When γ = 0, it is implied that a consumer’s demand is not influenced by the retailer’s green marketing efforts at all; otherwise, the demand will increase with the effort; when β = inf, this represents that the cost of purchasing additional capacity through the Cloud Manufacturing (CM) Platform is so high that the manufacturer will give up on expanding its capacity
Summary
With the depletion of natural resources and the deterioration of the environment, environmental issues affect all human activities, and environmental protection and sustainability are receiving increasing attention [1,2,3]. Retail channel display, and salesman explanations are the main ways available to most consumers for understanding, judging and choosing green products We refer to these activities as green marketing efforts, which are effective tools for translating consumers’ green awareness into actual purchasing behavior [19]. The game theoretic setup is a highly appropriate way of modeling the interaction between the two firms’ decisions To address these questions, we formulate a game model of a two-stage supply chain in which an upstream undercapacity manufacturer can obtain additional capacity through the CM platform, while the downstream retailer expends green marketing effort. The main contributions of this paper are as follows: based on Industry 4.0, a unified framework model of capacity sustainability is constructed; the enabling role of emerging information technology in the implementation of enterprise green practices is discussed; and a coordination contract for the green supply chain is designed.
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