Supply chain coordination under a revenue-sharing contract with corporate social responsibility and partial demand information

Abstract

Corporate social responsibility is among the most desired features of global operations in supply chains. Despite there is a societal urge for socially responsible supply chains, yet the supply chain players (manufactures, and retailers) may only be motivated being socially responsible given it warrants them improved performance and profitability. In this paper, we have proposed supply chain coordination schemes for pricing inventory, and corporate social responsibility investments decisions for a single manufacturer-retailer supply chain. We developed quantitative models for joint pricing, inventory (order quantity), and investment for socially responsible decisions for a supply chain. Models are formulated for both the price-and-CSR investment dependent deterministic and price-and-CSR investment dependent stochastic demand situations. We also explore when the price-and-CSR investment dependent stochastic demand information is only be partially known in a supply chain, and players may have to anticipate the worst possible demand. It is assumed the demand distribution is unknown, and a distribution-free approach is utilized. We have presented various game-theoretic settings that analyze the decentralized, centralized, and a revenue sharing agreement through bargaining for each of three demand situations. We developed analytical (closed-form) solutions for the control decisions for the players. In a detailed numerical study, the significance of each model, and how the societal responsiveness impacts the supply chain performance and the players' decision under varied game-theoretic settings is highlighted. The study also emphasizes the use of distribution-free approach to minimize the adverse impact of demand information distortion in a supply chain.