Cost-sharing models for green product production and marketing in a food supply chain

Qinghua Zhu · Xiaoying Li · Senlin Zhao

67 citations0/0 files storedIndustrial Management & Data Systems

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Sustainable Supply Chain Management Supply Chain and Inventory Management Environmental Sustainability in Business

Abstract

Purpose The purpose of this paper is to explore the coordination mechanism of cost sharing for green food production and marketing between a food producer and a supplier who both contribute to the sales of green food. Design/methodology/approach This paper first develops demand functions for both a food supplier and a producer, considering their influence on green degree of food and associated consumers’ acceptances. Then, cost-sharing contracts-based game models are proposed. At last, regarding to optimal supply chain profits and green performance, the proposed contracts and the non-coordination situation are compared and tested by a real case. Findings When green cost is only shared by one side, the cost-sharing contracts cannot optimally coordinate the food supply chain, but it can improve profits for both the supplier and producer. When consumers’ sensitivity to the green degree of food increases, a mutual cost-sharing contract will bring more profits for both the supplier and producer than those under the non-coordination mode in a decentralized supply chain situation. A real case verifies the conclusions. Research limitations/implications The models are in complete information, and the market demand is assumed to be linear to sales price. Mutual cost sharing is only for material processing and food production, which can be extended to include sharing for sales cost. Coordination ideas on the proposed contracts development and solutions for optimal decisions can be applied in the other industries. Practical implications The study shows that coordination between a supplier and a producer is needed to improve the food supply chain’s green performance. Originality/value This paper first extends the existing profit functions by considering the green efforts of both a supplier and a producer as well as their effects on green degree of products and consumers’ acceptances to the green degree.

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References

1993Market Orientation: Antecedents and Consequences 1993Market Orientation: Antecedents and Consequences 2001Targeting consumers who are willing to pay more for environmentally friendly products 2013A comparative literature analysis of definitions for green and sustainable supply chain management 2006Green supply chain management: pressures, practices and performance within the Chinese automobile industry 2013Institutional-based antecedents and performance outcomes of internal and external green supply chain management practices 2012Against the Green: A Multi-method Examination of the Barriers to Green Consumption 2010Balancing priorities: Decision‐making in sustainable supply chain management

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