Coordination of a Socially Responsible Two-Stage Supply Chain Under Random Demand

2019 ◽  
Vol 36 (05) ◽  
pp. 1950029
Author(s):  
Xia Zhao ◽  
Ning Li ◽  
Liang Song
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Expected Profit ◽  
Order Quantity ◽  
Random Demand ◽  
Coordination Problem ◽  
Socially Responsible ◽  
Numerical Examples ◽  
Corporate Social

This paper investigates the coordination problem of a supply chain (SC) composed of a manufacturer and a retailer both exhibiting corporate social responsibility (CSR) under generic random demand. Under a centralized decision, the unimodality of the expected profit is proven, and the expected profit of the SC is shown to be larger than that of the SC without CSR. Under a decentralized decision dominated by the manufacturer, the manufacturer determines the wholesale price and its CSR investment, and then the retailer decides the order quantity and its CSR investment. After showing that the revenue-sharing (RS) contract is not able to coordinate the SC, a modified RS (MRS) contract is proposed to coordinate the SC. At last, the numerical examples in which random demands follow normal distribution and uniform distribution are used to illustrate the validity of the theoretical analysis and the coordination effectiveness of the MRS contract.

scholarly journals Supply chain contracting coordination for fresh products with fresh-keeping effort

2017 ◽  
Vol 117 (3) ◽  
pp. 538-559 ◽  
Author(s):  
Qi Zheng ◽  
Petros Ieromonachou ◽  
Tijun Fan ◽  
Li Zhou
Keyword(s):  
Supply Chain ◽  
Cost Sharing ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Optimal Decision ◽  
Decision Variable ◽  
Coordination Problem ◽  
Content Type ◽  
Revenue Sharing Contract ◽  
Decentralized Decision Making

Purpose Fresh product loss rates in supply chain operations are particularly high due to the nature of perishable products. The purpose of this paper is to maximize profit through the contract between retailer and supplier. The optimized prices for the retailer and the supplier, taking the fresh-keeping effort into consideration, are derived. Design/methodology/approach To address this issue, the authors consider a two-echelon supply chain consisting of a retailer and a supplier (i.e. wholesaler) for two scenarios: centralized and decentralized decision making. The authors start from investigating the optimal decision in the centralized supply chain and then comparing the results with those of the decentralized decision. Meanwhile, a fresh-keeping cost-sharing contract and a fresh-keeping cost- and revenue-sharing contract are designed. Numerical examples are provided, and managerial insights are discussed at the end. Findings The results show that the centralized decision is more profitable than the decentralized decision; a fresh product supply chain (FPSC) can only be coordinated through a fresh-keeping cost- and revenue-sharing contract; the optimal retail price, wholesale price and fresh-keeping effort can all be achieved; and the profit of a FPSC is positively related to consumers’ sensitivity to freshness and negatively correlated with their sensitivity to price. Research limitations/implications This research is based on the assumption that demand is relatively stable. It has not addressed when demand is stochastic. Practical implications The findings would be useful for managers in fresh food sector in terms of how to deal with suppliers in order to maximize total profit while also provide freshest food to the customers. Originality/value Few studies have considered fresh-keeping effort as a decision variable in the modelling of supply chain. In this paper, a mathematical model for the fresh-keeping effort and for price decisions in a supply chain is developed. In particular, fresh-keeping cost-sharing contract and revenue-sharing contract are examined simultaneously in the study of the supply chain coordination problem.

scholarly journals Coordinating contracts as an instrument of supply chain profit maximization under short-term financing necessity

2020 ◽  
Vol 13 ◽  
pp. 57-94
Author(s):  
Irina Berezinets ◽  
◽  
Tatyana Voronova ◽  
Nikolay Zenkevich ◽  
Natalia Nikolchenko ◽  
...  
Keyword(s):  
Supply Chain ◽  
Trade Credit ◽  
Wholesale Price ◽  
Profit Maximization ◽  
Revenue Sharing ◽  
Expected Profit ◽  
Short Term ◽  
Bank Financing ◽  
Revenue Sharing Contract ◽  
Credit Financing

In this paper the problem of the supply chain expected profit maximization under the assumption of the short-term financing necessity for one of the supply chain parties using a coordinating contract is considered. The solution is derived for a two-echelon supply chain under the assumption of product demand being distributed as uniformly. A revenue-sharing contract with bank financing and a modified revenue-sharing contract with trade credit financing are explored. It is stated that none of the studied contracts is coordinating, as they do not provide the supplier’s expected profit maximum. The conditional coordination of supply chain with a modified revenue-sharing contract with trade credit financing is considered if the supply chain and the retailer’s expected profit maximum are reached and the supplier’s expected profit is greater than in case of application of a modified wholesale price contract with trade credit financing and a revenue-sharing contract with bank financing. It is proved that it is beneficial for both supply chain parties and the problem of the supply chain expected profit maximization under the assumption of the short-term financing necessity for one of the supply chain parties can be solved using a modified revenue-sharing contract with trade credit financing.

scholarly journals Production Decision and Coordination Mechanism of Socially Responsible Closed-Loop Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-10
Author(s):  
Xiaofeng Long ◽  
Jiali Ge ◽  
Tong Shu ◽  
Chunxia Liu
Keyword(s):  
Supply Chain ◽  
Social Responsibility ◽  
Closed Loop ◽  
Wholesale Price ◽  
Consumer Surplus ◽  
Revenue Sharing ◽  
Coordination Mechanism ◽  
Patent Licensing ◽  
Socially Responsible ◽  
Closed Loop Supply Chain

Corporate social responsibility (CSR) has a significant impact on the operation of enterprises. This study analyzes the production and coordination decisions of closed-loop supply chain (CLSC) by establishing two assumptions of endogenous and exogenous CSR. The results reveal that, for ordinary consumers, CSR is quantified as the parameter of consumer surplus, which has an impact on the patent licensing fee, revenue-sharing ratio, and so on, and which not only increases the sales quantity in CLSC but also creates more value for the manufacturer and the retailer. Considering endogenous CSR, the study found that the manufacturer’s CSR level and the manufacturer’s and the retailer’s profits both increase with the proportion of CSR-sensitive consumers. In the endogenous model, the manufacturer sets a higher wholesale price and lower patent licensing fee than in the exogenous model. Perfect coordination in the two models can be achieved by setting a revenue-sharing ratio related to wholesale price and patent licensing fee. In practice, improving the social responsibility consciousness of consumers and raising enterprises’ CSR level can achieve a win-win situation for revenues and social welfare.

scholarly journals Optimal Decisions and Coordination in a Socially Responsible Supply Chain with Irresponsibility Risk

2019 ◽  
Vol 11 (24) ◽  
pp. 7252
Author(s):  
Wang ◽  
Zhong ◽  
Xu
Keyword(s):  
Supply Chain ◽  
Stackelberg Game ◽  
Revenue Sharing ◽  
Investment Efficiency ◽  
Socially Responsible ◽  
Supply Chain System ◽  
Optimal Decisions ◽  
Investment Level ◽  
Consumer Responsibility ◽  
Corporate Social

Many companies make some stakeholders pleased but others cannot. To help understand why, it is very important to study the coexistence of corporate social responsibility (CSR) and corporate social irresponsibility (CSI). This paper considers a manufacturer with irresponsibility risk in a centralized and decentralized socially responsible supply chain, and uses a Stackelberg game to investigate the optimal policies on price and CSR investment level. This paper also examines the influence of consumer responsibility awareness and CSR investment efficiency on the decision behaviors of the manufacturer and retailer. Moreover, we developed a new mechanism to coordinate the decentralized supply chain system, which consists of the retailer participating in CSR and revenue sharing. Our results indicate that the manufacturer’s and retailer’s optimal decisions may not be significantly influenced by consumer responsibility awareness, but the effect of CSR investment efficiency is significant. Our results also show that if the degree of retailer participation and the proportion of revenue sharing are of moderate size, then not only can the contract mechanism coordinate the decentralized socially responsible supply chain, but it can ensure that a win–win situation can be achieved by the supply chain members.

scholarly journals A Study on Supply Chain Emission Reduction Level Based on Carbon Tax and Consumers’ Low-Carbon Preferences under Stochastic Demand

2019 ◽  
Vol 2019 ◽  
pp. 1-20 ◽  
Author(s):  
Liang Wang ◽  
Tingjia Xu ◽  
Longhao Qin
Keyword(s):  
Supply Chain ◽  
Emission Reduction ◽  
Carbon Tax ◽  
Wholesale Price ◽  
Concave Function ◽  
Revenue Sharing ◽  
Market Demand ◽  
Low Carbon ◽  
Order Quantity ◽  
Stochastic Market

This article focuses on the level of supply chain emission reduction, taking into account consumers’ low-carbon preferences, stochastic market demand, and carbon tax policy. By introducing the emission reduction penalty mechanism and adopting reverse derivation method, it derives the revenue model of the retailer and the manufacturer in decentralized and centralized supply chain when the supply chain reduces emissions or is not under stochastic market demand. The research results are as follows. (i) The optimal retailer’s revenue is strictly monotonous increasing with respect to the consumers’ low-carbon preferences in the decentralized supply chain. However, in the centralized supply chain, the optimal revenue of the retailer and the manufacturer are strictly monotonously decreasing of the consumers’ low-carbon preferences respectively. (ii) The retailer’s revenue is a concave function of the order quantity, and there exists a unique order quantity that can maximize retailer’s revenue. The manufacturer’s revenue is a concave function of the wholesale price, and there exists a unique wholesale price that can maximize manufacturer’s revenue. (iii) When consumers’ low-carbon preferences are given, there is an optimal emission reduction level that maximizes the overall revenue of the supply chain. Furthermore, as the carbon tax increases, the optimal emission reduction level gradually rises. (iv) As the level of emission reduction in the supply chain increases, the range of the revenue sharing coefficient becomes larger, and it is easier for supply chain members to reach a revenue sharing contract. However, when consumers’ low-carbon preferences and carbon tax increase, the opposite is true.

scholarly journals Supply Chain Contracts with Multiple Retailers in a Fuzzy Demand Environment

2013 ◽  
Vol 2013 ◽  
pp. 1-12 ◽  
Author(s):  
Shengju Sang
Keyword(s):  
Supply Chain ◽  
Revenue Sharing ◽  
Triangular Fuzzy Number ◽  
Expected Profit ◽  
Optimal Order ◽  
Market Demand ◽  
Order Quantity ◽  
Supply Chain Contracts ◽  
Fuzzy Demand ◽  
Sets Theory

This study investigates supply chain contracts with a supplier and multiple competing retailers in a fuzzy demand environment. The market demand is considered as a positive triangular fuzzy number. The models of centralized decision, return contract, and revenue-sharing contract are built by the method of fuzzy cut sets theory, and their optimal policies are also proposed. Finally, an example is given to illustrate and validate the models and conclusions. It is shown that the optimal total order quantity of the retailers fluctuates at the center of the fuzzy demand. With the rise of the number of retailers, the optimal order quantity and the fuzzy expected profit for each retailer will decrease, and the fuzzy expected profit for supplier will increase.

scholarly journals Optimal Decisions in a Single-Period Supply Chain with Price-Sensitive Random Demand under a Buy-Back Contract

2014 ◽  
Vol 2014 ◽  
pp. 1-11 ◽  
Author(s):  
Feng Wang ◽  
In-Chan Choi
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Retail Price ◽  
Optimal Decision ◽  
Order Quantity ◽  
Random Demand ◽  
Demand Distribution ◽  
Single Period ◽  
Pareto Equilibrium ◽  
Buy Back

This paper studies a single-period supply chain with a buy-back contract under a Stackelberg game model, in which the supplier (leader) decides on the wholesale price, and the retailer (follower) responds to determine the retail price and the order quantity. We analytically investigate the decentralized retailer’s optimal decision. Our results demonstrate that the retailer has a unique optimal simultaneous decision on the retail price and the order quantity, under a mild restriction on the demand distribution. Moreover, as it can be shown that the decentralized supply chain facing price-sensitive random demand cannot be coordinated with buy-back contract, we propose a scheme for the system to achieve Pareto-improvement. Theoretical analysis suggests that there exists a unique Pareto-equilibrium for the supply chain. In particular, when the Pareto-equilibrium is reached, the supply chain is coordinated. Numerical experiments confirm our results.

Implications for pure profit, environmental impact and social welfare in a socially responsible supply chain

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhichao Zhang ◽  
Haiyan Xu ◽  
Zhi Liu ◽  
Yinhai Fang
Keyword(s):  
Supply Chain ◽  
Environmental Impact ◽  
Social Welfare ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Socially Responsible ◽  
Content Type ◽  
Csr Strategies ◽  
Revenue Sharing Contract ◽  
The Social

Purpose Members in a supply chain account for corporate social responsibility (CSR) in different ways. This paper considers a socially responsible supply chain in which the manufacturer innovates in a sustainable product while the retailer exhibits CSR concerns. This paper aims to investigate how socially responsible behavior, namely, sustainable innovations or CSR concerns, affects the pure profit, environmental impact and social welfare, in such a socially responsible supply chain. Design/methodology/approach This paper first constructs an integrated case as a benchmark and then develops a Manufacturer-Stackelberg game in a decentralized scenario. The pure profit, environmental impact and social welfare are confirmed and analyzed in centralized and decentralized cases. Moreover, two unique coordinating contracts, i.e. wholesale price discount contract and revenue-sharing contract, are used in this socially responsible supply chain. Findings Analytical analysis shows that, under certain conditions, the optimal CSR strategies hold for maximizing pure channel profit, minimizing environmental impact and maximizing social welfare. Whether the performance in a centralized case outnumbers that in a decentralized case depends on the CSR concerns level and environment-friendly degree of the product. In addition, it is found that a wholesale price discount contract is better for the retailer whereas a revenue-sharing contract is better for the manufacturer in pure profit to improve coordinating efficiency. Practical implications These results can offer managerial implications to the socially responsible supply chain in terms of pricing decisions, CSR strategies and sustainability innovations. Specifically, under certain conditions, placing more CSR concerns level increases pure channel profit and the social welfare. A balance between the pure profit and the social welfare is hereby achieved for the two socially responsible individuals by designing a proper contract. Originality/value To the best of the authors’ knowledge, this paper is among the first studies so far to combine the CSR concerns strategy and sustainability innovation into a socially responsible supply chain.

scholarly journals Coping with Loss Aversion and Risk Management in the Supply Chain Coordination

2021 ◽  
Vol 13 (8) ◽  
pp. 4364
Author(s):  
Wei Liu ◽  
Han Zhao ◽  
Shiji Song ◽  
Wenxuan He ◽  
Xiaochen Li
Keyword(s):  
Supply Chain ◽  
Loss Aversion ◽  
Confidence Level ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Conditional Value At Risk ◽  
Optimal Order ◽  
Order Quantity ◽  
Buyback Contract ◽  
Optimal Order Quantity

In this paper, we apply a combined revenue sharing and buyback contract to investigate the channel coordination of a two-echelon supply chain with a loss-averse retailer. Since loss-averse decision makers usually take on more risks, the Conditional Value-at-Risk (CVaR) measure is introduced to hedge against it and the retailer’s objective is to maximize the CVaR of utility. We obtain the retailer’s optimal order quantity under the combined contract. It is shown that there is a unique wholesale price coordinating the supply chain if the retailer’s confidence level is less than a threshold that is independent of contract parameters. Moreover, a complete sensitivity analysis of parameters is carried out. In particular, the retailer’s optimal order quantity and coordinating wholesale price decreases as the loss aversion or confidence level increases, while it increase as the buyback price or sharing coefficient increases. Furthermore, there exists the situation where the combined contract can coordinate the chain even though neither the revenue sharing nor buyback contract can when the contract parameters are constrained.

scholarly journals Coordination for pull and push contracts in decentralized system with uncertain supply

2020 ◽  
Author(s):  
Wensi Zhang ◽  
Hongrui Chu
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Revenue Sharing ◽  
Order Quantity ◽  
Management Decisions ◽  
Decentralized System ◽  
Decentralized Supply Chain ◽  
Revenue Sharing Contract ◽  
Buyback Contract ◽  
Uncertain Supply

This paper investigates how a random supply can influence management decisions under pull and push contracts in a decentralized supply chain with one supplier and one retailer. We suppose that the supplier faces yield uncertainty, and we adopt game models to analyse the supply chain members’ decisions (i.e., wholesale price and order quantity) under the two commonly used contracts. Specifically, we analyse the revenue sharing mechanism and buyback mechanism with pull and push contracts, respectively, and find that the buyback contract can efficiently coordinate the supply chain with push contract, while the revenue sharing contract cannot improve the performance with a pull contract. Then we design a modified revenue sharing contract that introduces a subsidy for excess inventory and shows that for the pull case, the proposed mechanism can coordinate the supply chain effectively. Finally, the analysis results are displayed intuitively by numerical cases.

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