Enhancing supply chain relationships in the circular economy: Strategies for a green centralized supply chain with deteriorating products

Abstract

This article introduces a green centralized supply chain in a two-stage stochastic programming model using deteriorating products. The model reduces the cost of purchasing, transporting, storing, product recovery and shortages. This cuts down on greenhouse emission related to transportation, product recovery, and recycling programs. On the basis of this, we explore the utilization of the circular economy to the damages that could occur from used products. Furthermore, revenue sharing and quantity discount contracts are examined in the business models between the members of the supply chain and the external manufacturer. Demand is assumed to be uncertain, and scenarios are created to account this. The model specifies the optimal order quantities, transportation modes and contract terms that minimize costs and environmental impacts. Numerical examples analyze the trade-offs between economic and environmental objectives under different supply chain parameters. The results provide insights for circular supply chains that reconcile economic incentives with environmental responsibility for deteriorating product.

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