Abstract
We are now living in the big data era, where firms can improve their decision makings by adopting big data technology to utilize mass information. To explore the effects of the big data technology, we build an analytical model to study the sustainable investment in a supply chain, consisting of one manufacturer and one retailer, by using Bayesian information updating approach. We derive the optimal sustainable investment level for the manufacturer and the optimal order quantity for the retailer. Comparing the results with and without the big data technology, we find that whether the manufacturer should make more sustainable investment when the retailer adopts the big data technology depends on the service level at the retailer side. Interestingly, it is not always optimal for the retailer to adopt the big data technology. We identify the conditions under which the manufacturer and retailer are better off with the big data technology. In addition, we investigate the impact of the number of observations regarding the market information and find that the optimal decisions and profits increase in the number of the observations, if and only if the service level is low.
Highlights
With the development of information technology, firms are able to access, store and process massive amount of data
Comparing the results with and without the big data technologies, we find that whether the manufacturer should make more sustainable investment with the big data technology than that without the big data technology depends on the service level at the retailer side
We identify the thresholds associated with the unit production cost and the service level, under which the manufacturer is better off when the retailer adopts the big data technology
Summary
With the development of information technology, firms are able to access, store and process massive amount of data. Firms have incentive to do the sustainable investment, such as adopting the cleaner technology, to reduce the carbon emission. The sustainable investment benefits the manufacturer by reducing the carbon emission and the retailer This is because, as shown in both research papers and industry reports, the sustainable investment in the products has positive effects on the demands [7]. In the framework of the supply chain, adoption of the big data technology by the retailer may affect the sustainable investment for the manufacturer. To the best of our knowledge, this is the first paper studying the sustainable investment with the consideration of consumer environmental awareness and information updating in the big data era.
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