Coordination of a green supply chain with one manufacturer and two duopolistic retailers through an environmental and social cost sharing contract

Document Type : Research Paper

Authors

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

Abstract

In this paper, an incentive contract is proposed to coordinate the environmental and social decisions in a manufacturer-duopolistic retailers green supply chain.The manufacturer invests in newtechnology to enhance the green level of the products and two retailers invest in the corporate social responsibility (CSR). The investigated supply chain is modeled under three decision-making structures. In the decentralized model, a manufacturer-Stackelberg game under the two different game behaviors of retailers (Cournot and Collusion) is investigated. Afterward, the centralized model as a benchmark is established. Then, an environmental and social cost sharing contract is developed to encourage the supply chain members to participate in the coordination model. Under the coordination model, the surplus profit is shared among the members based on the members’ bargaining power. Results demonstrate that the proposed coordination contract not only improves the profitability of entire supply chain and members,but also enhances the green quality and CSR investment compared with the decentralized model. Therefore, theproposed coordination model is of high importance from environmental consideration.

Keywords

Main Subjects


Aljazzar, S. M., Jaber, M. Y., &Moussawi-Haidar, L. (2016). Coordination of a three-level supply chain (supplier–manufacturer–retailer) with permissible delay in payments. Applied Mathematical Modelling, 40(21), 9594-9614.
Basiri, Z., &Heydari, J. (2017). A mathematical model for green supply chain coordination with substitutable products. Journal of Cleaner Production, 145, 232–249.
Dai, R., Zhang, J., & Tang, W. (2017). Cartelization or Cost-sharing? Comparison of cooperation modes in a green supply chain. Journal of Cleaner Production, 156, 159-173.
Duan, Y., Huo, J., Zhang, Y., & Zhang, J. (2012). Two level supply chain coordination with delay in payments for fixed lifetime products. Computers & Industrial Engineering, 63(2), 456-463.
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.
Heydari, J., Zaabi-Ahmadi, P., & Choi, T. M. (2016). Coordinating supply chains with stochastic demand by crashing lead times. Computers & Operations Research.
Hojati, S., Seyedhosseini, 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.
Hou, J., Zeng, A. Z., & Zhao, L. (2010). Coordination with a backup supplier through buy-back contract under supply disruption. Transportation Research Part E: Logistics and Transportation Review, 46(6), 881-895.
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.
Johari, M., Hosseini-Motlagh, S. M., &Nematollahi, M. R. 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.
Kanda, A., &Deshmukh, S. G. (2009). A framework for evaluation of coordination by contracts: A case of two-level supply chains. Computers & Industrial Engineering, 56(4), 1177-1191.
Li, J., & Liu, L. (2006). Supply chain coordination with quantity discount policy. International Journal of Production Economics, 101(1), 89-98.
Li, L., Wang, Y., & Dai, W. (2016). Coordinating supplier retailer and carrier with price discount policy. Applied Mathematical Modelling, 40(1), 646-657.
Linh, C. T., & Hong, Y. (2009). Channel coordination through a revenue sharing contract in a two-period newsboy problem. European Journal of Operational Research, 198(3), 822-829.
Modak, N. M., Panda, S., Mishra, R., & Sana, S. S. (2016). A three-layer supply chain coordination in socially responsible distribution system. Tékhne, 14(1), 75-87.
Nematollahi, M., Hosseini-Motlagh, S. M., &Heydari, J. (2017) “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. (2017) “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.
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.
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, H., &Gao, X. (2018). Green supply chain game model and analysis under revenue-sharing contract. Journal of Cleaner Production, 170, 183-192.
Swami, S., & Shah, J. (2013). Channel coordination in green supply chain management. Journal of the operational research society, 64(3), 336-351.
Xu, X., He, P., Xu, H., & Zhang, Q. (2017). Supply chain coordination with green technology under cap-and-trade regulation. International Journal of Production Economics, 183, 433-442.
Yang, H., & Chen, W. (2017). Retailer-driven carbon emission abatement with consumer environmental awareness and carbon tax: Revenue-sharing versus cost-sharing. Omega.
Yang, L., Zhang, Q., &Ji, J. (2017). Pricing and carbon emission reduction decisions in supply chains with vertical and horizontal cooperation. International Journal of Production Economics, 191, 286-297.
Zhang, C. T., & Liu, L. P. (2013). Research on coordination mechanism in three-level green supply chain under non-cooperative game. Applied Mathematical Modelling, 37(5), 3369-3379.
Zhang, L., Wang, J., & You, J. (2015). Consumer environmental awareness and channel coordination with two substitutable products. European Journal of Operational Research, 241(1), 63-73.
Zhao, Y., Choi, T. M., Cheng, T. C. E., Sethi, S. P., & Wang, S. (2014). Buyback contracts with price-dependent demands: Effects of demand uncertainty. European Journal of Operational Research, 239(3), 663-673.