Green Product Supply Chain Coordination Under Demand Uncertainty

Abstract

The problem of coordinating a two-echelon green product supply chain with environmentally conscious consumers under demand uncertainty is studied in this paper. In the green product supply chain, a manufacturer produces green product through developing green technology and a retailer promotes the green product through green marketing. The demand of the green product is uncertain with the mean and the variance as the only known information. After analyzing the utility that a consumer gained from the green product, the problem is then formulated as a distribution-free-based Stackelberg game for a decentralized system under three contracts, i.e., wholesale price-only (WPO), revenue and green marketing cost-sharing (RGMS), and two-part tariff (TPTF) contracts. The analytical results are also proposed to show the effects of the system parameters on supply chain optimal decisions. By comparing with the centralized system, the coordination level for each contract is investigated. Numerical examples and sensitivity analysis with respect to several system parameters are presented to illustrate the effectiveness of the contracts under demand uncertainty. The results demonstrate that both RGMS and TPTF contracts are superior to WPO contract. Especially, TPTF contract can always coordinate the supply chain, while RGMS contract can improve the supply chain coordination level only if the revenue and cost sharing coefficients satisfy certain conditions.

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