Coordination of promotional effort, corporate social responsibility and periodic review replenishment decisions in a two-echelon socially responsible supply chain

Document Type : Research Paper

Authors

1 School of Industrial Engineering, Iran University of Science & Technology, Tehran, Iran

2 School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran

Abstract

In this paper, we explore the issue of coordination in a manufacturer-retailer supply chain where the manufacturer is socially responsible and invests in CSR activities. On the other hand, the retailer invests in promotional efforts and uses a periodic review order-up-to policy for replenishing items. First, the decentralized decision-making structure is modeled to calculate the minimum acceptable level for the members profit to accept coordination. Then, the centralized structure is formulated to obtain the benchmark solutions for the whole supply chain profitability. Afterwards, a cost-sharing (CS) contract is proposed to persuade the members to accept the centralized decision-making structure and to follow the benchmark solutions. The results of the sensitivity analyses demonstrated that the proposed coordination model is beneficial from three aspects, i. e. economic, environmental and social viewpoint, compared to the decentralized model. Furthermore, some outstanding managerial insights are provided which further illustrates the applicability of the proposed model.

Keywords

Main Subjects

References

Aljazzar, S. M., Jaber, M. Y., and Moussawi-Haidar, L. (2017). Coordination of a three-level supply chain (supplier–manufacturer–retailer) with permissible delay in payments and price discounts. Applied Mathematical Modelling, 48, 289-302.
Bai, Q., Chen, M., & Xu, L. (2017). Revenue and promotional cost-sharing contract versus two-part tariff contract in coordinating sustainable supply chain systems with deteriorating items. International Journal of Production Economics, 187, 85-101.
Bai, Q., Xu, X., Xu, J., & Wang, D. (2016). Coordinating a supply chain for deteriorating items with multi-factor-dependent demand over a finite planning horizon. Applied Mathematical Modelling, 40(21), 9342-9361.
Bai, Q.-G., Xu, X.-H., Chen, M.-Y., and Luo, Q. (2015). A two-echelon supply chain coordination for deteriorating item with a multi-variable continuous demand function. International Journal of Systems Science: Operations and Logistics, 2(1), 49–62.
Basiri, Z., & Heydari, J. (2017). A mathematical model for green supply chain coordination with substitutable products. Journal of Cleaner Production, 145, 232-249.
Beheshtinia, M. A., Ghasemi, A., & farokhnia, M. (2017a). Supply chain scheduling and routing in multi-site manufacturing system (case study: a drug manufacturing company). Journal of Modelling in Management. https://doi.org/10.1108/JM2-10-2016-0094
Beheshtinia, M. A., & Nemati-Abozar, V. (2017b). A Novel Hybrid Fuzzy Multi-Criteria Decision-Making Model for Supplier Selection Problem (A Case Study in Advertising industry). Journal of Industrial and Systems Engineering. 9(4), 65-79.
 
Berman, O., Krass, D., & Tajbakhsh, M. M. (2012). A coordinated location-inventory model. European Journal of Operational Research, 217(3), 500-508.
Brand, B., & Grothe, M. (2013). A note on ‘Corporate Social Responsibility and Marketing Channel Coordination’. Research in Economics, 67(4), 324-327.
Chaharsooghi, S. K., and Heydari, J. (2010). Supply chain coordination for the joint determination of order quantity and reorder point using credit option. European Journal of Operational Research, 204(1), 86-95.
Chakraborty, A., & Chatterjee, A. K. (2016). A surcharge pricing scheme for supply chain coordination under JIT environment. European Journal of Operational Research, 253(1), 14-24.
Chang, C. T., & Chou, H. C. (2013). A coordination system for seasonal demand problems in the supply chain. Applied Mathematical Modelling, 37(6), 3674-3686.
Chen, K., & Xiao, T. (2011). Ordering policy and coordination of a supply chain with two-period demand uncertainty. European Journal of Operational Research, 215(2), 347-357.
Chiu, C. H., Choi, T. M., and Li, X. (2011). Supply chain coordination with risk sensitive retailer under target sales rebate. Automatica, 47(8), 1617-1625.
Corporate social responsibility. December 22, 2017 from Microsoft official website on the world wide web:  https://www.microsoft.com/en-us/about/corporate-responsibility
Duan, Y., Huo, J., Zhang, Y., and Zhang, J. (2012). Two level supply chain coordination with delay in payments for fixed lifetime products. Computers and Industrial Engineering, 63(2), 456-463.
Ebrahimi, S., Hosseini-Motlagh, S. M., & Nematollahi, M. (2017). Proposing a delay in payment contract for coordinating a two-echelon periodic review supply chain with stochastic promotional effort dependent demand. International Journal of Machine Learning and Cybernetics. https://doi.org/10.1007/s13042-017-0781-6
Eynan, A., & Kropp, D. H. (2007). Effective and simple EOQ-like solutions for stochastic demand periodic review systems. European Journal of Operational Research, 180(3), 1135-1143.
Gao, D., Zhao, X., and Geng, W. (2014). A delay-in-payment contract for Pareto improvement of a supply chain with stochastic demand. Omega, 49, 60-68.
Goering, G. E. (2012). Corporate social responsibility and marketing channel coordination. Research in Economics, 66(2), 142-148.
Heydari, J., Choi, T. M., and Radkhah, S. (2017). Pareto improving supply chain coordination under a money-back guarantee service program. Service Science, 9(2), 91-105.
Heydari, J., Rastegar, M., and Glock, C. H. (2017). A two-level delay in payments contract for supply chain coordination: The case of credit-dependent demand. International Journal of Production Economics.
Heydari, J., and Asl-Najafi, J. (2016). Coordinating inventory decisions in a two-echelon supply chain through the target sales rebate contract. International Journal of Inventory Research, 3(1), 49-69.
Heydari, J., and Norouzinasab, Y. (2016). Coordination of pricing, ordering, and lead time decisions in a manufacturing supply chain. Journal of Industrial and Systems Engineering, 9, 1-16.
Heydari, J., and Norouzinasab, Y. (2015). A two-level discount model for coordinating a decentralized supply chain considering stochastic price-sensitive demand. Journal of Industrial Engineering International, 11(4), 531-542.
Heydari, J. (2015). Coordinating replenishment decisions in a two-stage supply chain by considering truckload limitation based on delay in payments. International Journal of Systems Science, 46(10), 1897-1908.
Hojati, S., Seyyedhosseini, S. M., Hosseini-Motlagh, S. M., & Nematollahi, M. (2017). Coordination and profit sharing in a two-level supply chain under periodic review inventory policy with delay in payments contract. Journal of Industrial and Systems Engineering, 10, 109-131.
Hu, B., & Feng, Y. (2017). Optimization and coordination of supply chain with revenue sharing contracts and service requirement under supply and demand uncertainty. International Journal of Production Economics, 183, 185-193.
Hsueh, C. F. (2014). Improving corporate social responsibility in a supply chain through a new revenue sharing contract. International Journal of Production Economics, 151, 214-222.
Hu, F., Lim, C. C., & Lu, Z. (2013). Coordination of supply chains with a flexible ordering policy under yield and demand uncertainty. International Journal of Production Economics, 146(2), 686-693
Joglekar, P. (1988). Comments on a quantity discount pricing model to increase vendor profits. Management science, 34(11), 1391-1398.
Johari, M., Hosseini-Motlagh, S. M., & Nematollahi, M. (2017a). Simultaneous coordination of review period and order-up-to-level in a manufacturer-retailer chain. Journal of Industrial and Systems Engineering, 10, 1-17.
Johari, M., Hosseini-Motlagh, S. M., & Nematollahi, M. R. (2017b). Coordinating pricing and periodic review replenishment decisions in a two-echelon supply chain using quantity discount contract. Journal of Industrial Engineering and Management Studies, 3(2), 58-87.
Johari, M., Hosseini-Motlagh, S. M., & Nematollahi, M. (2017c). Supply Chain Coordination using Different Modes of Transportation Considering Stochastic Price-Dependent Demand and Periodic Review Replenishment Policy. International Journal of Transportation Engineereing, 5(2), 137-165.
Johari, M., & Hosseini-Motlagh, S. M. (2018). Coordination of cooperative promotion efforts with competing retailers in a manufacturer-retailer supply chain. Uncertain Supply Chain Management, 6(1), 25-48.
Li, J., and Liu, L. (2006). Supply chain coordination with quantity discount policy. International Journal of Production Economics, 101(1), 89-98.
Mai, D. T., Liu, T., Morris, M. D., & Sun, S. (2017). Quality coordination with extended warranty for store-brand products. European Journal of Operational Research, 256(2), 524-532.
Modak, N. M., Panda, S., Sana, S. S., & Basu, M. (2014). Corporate social responsibility, coordination and profit distribution in a dual-channel supply chain. Pacific Science Review, 16(4), 235-249.
Ma, P., Wang, H., and Shang, J. (2013). Contract design for two-stage supply chain coordination: Integrating manufacturer-quality and retailer-marketing efforts. International Journal of Production Economics, 146(2), 745–755.
Nematollahi, M., Hosseini-Motlagh, S. M., & Heydari, J. (2017a). Coordination of social responsibility and order quantity in a two-echelon supply chain: A collaborative decision-making perspective. International Journal of Production Economics, 184, 107-121.
Nematollahi, M., Hosseini-Motlagh, S. M., & Heydari, J. (2017b). Economic and social collaborative decision-making on visit interval and service level in a two-echelon pharmaceutical supply chain. Journal of Cleaner Production, 142, 3956-3969.
Nematollahi, M., Hosseini-Motlagh, S. M., Ignatius, J., Goh, M., & Nia, M. S. (2018). Coordinating a socially responsible pharmaceutical supply chain under periodic review replenishment policies. Journal of Cleaner Production, 172, 2876-2891.
Nie, T., and Du, S. (2017). Dual-fairness supply chain with quantity discount contracts. European Journal of Operational Research, 258(2), 491-500.
Ni, D., Li, K. W., & Tang, X. (2010). Social responsibility allocation in two-echelon supply chains: Insights from wholesale price contracts. European Journal of Operational Research, 207(3), 1269-1279.
Ouyang, L. Y., Chuang, B. R., 2000, A periodic review inventory model involving variable lead time with a service level constraint, International Journal of Systems Science, 31: 1209-1215.
Pal, B., Sana, S. S., & Chaudhuri, K. (2015). Coordination contracts for competitive two-echelon supply chain with price and promotional effort sensitive non-linear demand. International Journal of Systems Science: Operations & Logistics, 2(2), 113-124.
Panda, S. (2014). Coordination of a socially responsible supply chain using revenue sharing contract. Transportation Research Part E: Logistics and Transportation Review, 67, 92-104
Panda, S., & Modak, N. M. (2016). Exploring the effects of social responsibility on coordination and profit division in a supply chain. Journal of Cleaner Production, 139, 25-40.
Song, J., Li, F., Wu, D. D., Liang, L., & Dolgui, A. (2017). Supply chain coordination through integration of innovation effort and advertising support. Applied Mathematical Modelling, 49, 108-123
Tagaras, G., and Vlachos, D. (2001). A Periodic Review Inventory System with Emergency Replenishments. Management Science, 47(3), 415–429.
Top things to know about sustainable innovation at Nike. December 20, 2017 from Nike, Inc. on the world wide web: https://news.nike.com/news/sustainable-innovation
Tsao, Y. C., & Sheen, G. J. (2012). Effects of promotion cost sharing policy with the sales learning curve on supply chain coordination. Computers & Operations Research, 39(8), 1872-1878.
Van Marrewijk, M. (2003). Concepts and definitions of CSR and corporate sustainability: Between agency and communion. Journal of business ethics, 44(2), 95-105.
Wang, J., & Shin, H. (2015). The impact of contracts and competition on upstream innovation in a supply chain. Production and Operations Management, 24(1), 134-146.
Wong, W. K., Qi, J., and Leung, S. Y. S. (2009). Coordinating supply chains with sales rebate contracts and vendor-managed inventory. International Journal of Production Economics, 120(1), 151-161.
Wu, D. (2013). Coordination of competing supply chains with news-vendor and buyback contract. International Journal of Production Economics, 144(1), 1-13.
Ye, T., Sun, H., & Li, Z. (2016). Coordination of pricing and leadtime quotation under leadtime uncertainty. Computers & Industrial Engineering, 102, 147-159.
Zhang, F., & Wang, C. (2018). Dynamic pricing strategy and coordination in a dual-channel supply chain considering service value. Applied Mathematical Modelling, 54, 722-742
Zhang, Z. H., & Unnikrishnan, A. (2016). A coordinated location-inventory problem in closed-loop supply chain. Transportation Research Part B: Methodological, 89, 127-148.
Zhang, J., Gou, Q., Liang, L., & Huang, Z. (2013). Supply chain coordination through cooperative advertising with reference price effect. Omega, 41(2), 345-353.
Zhang, B., Lu, S., Zhang, D., and Wen, K. (2014). Supply chain coordination based on a buyback contract under fuzzy random variable demand. Fuzzy Sets and Systems, 255, 1-16.
Zhou, Y., Bao, M., Chen, X., & Xu, X. (2016). Co-op advertising and emission reduction cost sharing contracts and coordination in low-carbon supply chain based on fairness concerns. Journal of Cleaner Production, 133, 402-413.

Files

History

  • Receive Date: 31 December 2017
  • Revise Date: 23 January 2018
  • Accept Date: 20 March 2018

Share

How to cite

Statistics