Design of an environmental contract under trade credits and carbon emission reduction. (English) Zbl 1513.90109
Summary: Most of the previous literatures proposed a single coordination contract to increase the total profit of the supply chain, while this paper focuses on how to design environmental contracts to increase economic and environmental performance in the context of sustainable development. This paper designs the environmental contract based on cap-and-trade mechanism and trade credits which has rarely been studied before, especially the impact of trade credit on environmental performance. We consider a green supply chain, assuming that the demand rate is linear with retail prices, joint carbon emission reduction efforts and trade credit. Two models, a decentralized one and a centralized one, are compared; four contracts are proposed. Via numerous examples and sensitivity analysis, we gain some insight into how to select supply chain contracts to better improve environmental performance. The results reveal that the manufacturer sharing the retailer’s revenue and cost contract obtains the highest profit. While revenue sharing contract between both parties is the optimal environmental contract, but it is difficult to increase the profit of supply chain. Furthermore, it is found that trade credit works well in protecting the environment and plays a significant role in achieving coordination.
MSC:
| 90B50 | Management decision making, including multiple objectives |
| 91B24 | Microeconomic theory (price theory and economic markets) |
| 91A40 | Other game-theoretic models |
| 91B76 | Environmental economics (natural resource models, harvesting, pollution, etc.) |
| 90B05 | Inventory, storage, reservoirs |
Keywords:
green supply chain; joint emission reduction; pricing strategy; coordinative contracts; trade creditReferences:
| [1] | S. M. Aljazzar; A. Gurtu; M. Y. Jaber, Delay-in-payments-A strategy to reduce carbon emissions from supply chains, Journal of Cleaner Production, 170, 636-644 (2018) · doi:10.1016/j.jclepro.2017.08.177 |
| [2] | S. An; B. Li; D. Song; X. Chen, Green credit financing versus trade credit financing in a supply chain with carbon emission limits, European Journal of Operational Research, 292, 125-142 (2021) · Zbl 1487.90071 · doi:10.1016/j.ejor.2020.10.025 |
| [3] | Q. Bai; M. Chen; L. Xu, Revenue and promotional cost-sharing contract versus two-part tariff contract in coordinating sustainable supply chain systems with deteriorating items, International Journal of Production Economics, 187, 85-101 (2017) · doi:10.1016/j.ijpe.2017.02.012 |
| [4] | Q. Bai, J. Xu and S. S. Chauhan, Effects of sustainability investment and risk aversion on a two-stage supply chain coordination under a carbon tax policy, Computers & Industrial Engineering, 142 (2020), 106324. |
| [5] | Y. Bouchery; A. Ghaffari; Z. Jemai; Y. Dallery, Including sustainability criteria into inventory models, European Journal of Operational Research, 222, 229-240 (2012) · Zbl 1253.90021 · doi:10.1016/j.ejor.2012.05.004 |
| [6] | E. Cao; M. Yu, Trade credit financing and coordination for an emission-dependent supply chain, Computers & Industrial Engineerin, 119, 50-62 (2018) · doi:10.1016/j.cie.2018.03.024 |
| [7] | X. Cao; T. T. Ke, Cooperative search advertising, Management Science, 38, 44-67 (2018) · doi:10.1287/mksc.2018.1111 |
| [8] | S. Ebrahimi; S. Hosseinimotlagh; M. Nematollahi, Proposing a delay in payment contract for coordinating a two-echelon periodic review supply chain with stochastic promotional effort dependent demand, International Journal of Machine Learning and Cybernetics, 10, 1037-1050 (2019) · doi:10.1007/s13042-017-0781-6 |
| [9] | M. Giannetti; M. Burkart; T. Ellingsen, What you sell is what you lend? explaining trade credit contracts, Review of Financial Studies, 24, 1261-1298 (2011) · doi:10.2139/ssrn.930390 |
| [10] | S. K. Goyal, Economic order quantity under conditions of permissible delay in payments, Journal of the Operational Research Society, 36, 1069-1069 (1985) · Zbl 0568.90025 · doi:10.1057/jors.1985.56 |
| [11] | S. Guo; T. M. Choi; B. Shen, Green product development under competition: A study of the fashion apparel industry, European Journal of Operational Research, 280, 523-538 (2020) · Zbl 1430.90084 · doi:10.1016/j.ejor.2019.07.050 |
| [12] | J. Heydari; J. Asl-Najafi, A revised sales rebate contract with effort-dependent demand: A channel coordination approach, International Transactions in Operational Research, 28, 438-469 (2021) · Zbl 07768513 · doi:10.1111/itor.12556 |
| [13] | J. Heydari; M. Rastegar; C. H. Glock, A two-level delay in payments contract for supply chain coordination: The case of credit-dependent demand, International Journal of Production Economics, 191, 26-36 (2017) · doi:10.1016/j.ijpe.2017.05.004 |
| [14] | Z. Hong; X. Guo, Green product supply chain contracts considering environmental responsibilities, Omega, 83, 155-166 (2019) · doi:10.1016/j.omega.2018.02.010 |
| [15] | S. M. Hosseini-Motlagh; M. Nematollahi; M. Johari; B. R. Sarker, A collaborative model for coordination of monopolistic manufacturer’s promotional efforts and competing duopolistic retailers’ trade credits, International Journal of Production Economics, 204, 108-122 (2018) · doi:10.1016/j.ijpe.2018.07.027 |
| [16] | X. Hu, Z. Yang, J. Sun and Y. Zhang, Carbon tax or cap-and-trade: Which is more viable for Chinese remanufacturing industry, Journal of Cleaner Production, 243 (2020), 118606. |
| [17] | G. Hua; T. C. E. Cheng; S. Wang, Managing carbon footprints in inventory management, International Journal of Production Economics, 132, 178-185 (2011) · doi:10.1016/j.ijpe.2011.03.024 |
| [18] | M. Y. Jaber; I. H. Osman, Coordinating a two-level supply chain with delay in payments and profit sharing, Computers & Industrial Engineering, 50, 385-400 (2006) · doi:10.1016/j.cie.2005.08.004 |
| [19] | J. Ji; Z. Zhang; L. Yang, Carbon emission reduction decisions in the retail-/dual-channel supply chain with consumers’ preference, Journal of Cleaner Production, 141, 852-867 (2017) · doi:10.1016/j.jclepro.2016.09.135 |
| [20] | T. Ji; X. Xu; X. Yan; Y. Yu, The production decisions and cap setting with wholesale price and revenue sharing contracts under cap-and-trade regulation, International Journal of Production Research, 58, 128-147 (2020) · doi:10.1080/00207543.2019.1641239 |
| [21] | J. Jian, B. Li, N. Zhang and J. Su, Decision-making and coordination of green closed-loop supply chain with fairness concern, Journal of Cleaner Production, 298 (2021), 126779. |
| [22] | M. Kanada; T. Fujita; M. Fujii; S. Ohnishi, The long-term impacts of air pollution control policy: Historical links between municipal actions and industrial energy efficiency in kawasaki city, japan, Journal of Cleaner Production, 58, 92-101 (2013) · doi:10.1016/j.jclepro.2013.04.015 |
| [23] | M. Kennedy; V. N. Dinh; B. Basu, Analysis of consumer choice for low-carbon technologies by using neural networks, Journal of Cleaner Production, 112, 3402-3412 (2016) · doi:10.1016/j.jclepro.2015.10.035 |
| [24] | V. B. Kreng; S. J. Tan, The optimal replenishment decisions under two levels of trade credit policy depending on the order quantity, Expert Systems with Applications, 37, 5514-5522 (2010) · doi:10.1016/j.eswa.2009.12.014 |
| [25] | H. Krishnan; R. Kapuscinski; D. A. Butz, Coordinating contracts for decentralized supply chains with retailer promotional effort, Management Science, 50, 1-131 (2004) · doi:10.1287/mnsc.1030.0154 |
| [26] | H. H. Lee; J. Zhou; J. Wang, Trade credit financing under competition and its impact on firm performance in supply chains, Manufacturing & Service Operations Management, 20, 1-160 (2018) · doi:10.1287/msom.2017.0640 |
| [27] | Q. Lin; Y. Xiao; J. Zheng, Selecting the supply chain financing mode under price-sensitive demand: Confirmed warehouse financing vs. trade credit, Journal of Industrial and Management Optimization, 17, 2031-2049 (2021) · Zbl 1476.91065 · doi:10.3934/jimo.2020057 |
| [28] | P. Ma; H. Wang; J. Shang, Contract design for two-stage supply chain coordination: Integrating manufacturer-quality and retailer-marketing efforts, International Journal of Production Economics, 146, 745-755 (2013) · doi:10.1016/j.ijpe.2013.09.004 |
| [29] | N. Pakhira; M. K. Maiti; M. Maiti, Uncertain multi-item supply chain with two level trade credit under promotional cost sharing, Computers & Industrial Engineering, 118, 451-463 (2018) · doi:10.1016/j.cie.2018.02.030 |
| [30] | H. Peng; T. Pang; J. Cong, Coordination contracts for a supply chain with yield uncertainty and low-carbon preference, Journal of Cleaner Production, 205, 291-302 (2018) · doi:10.1016/j.jclepro.2018.09.038 |
| [31] | H. Peura; S. A. Yang; G. Lai, Trade credit in competition: A horizontal benefit, Manufacturing & Service Operations Management, 19, 263-289 (2017) · doi:10.1287/msom.2016.0608 |
| [32] | D. A. Phan; T. L. Vo; A. N. Lai, Supply chain coordination under trade credit and retailer effort, International Journal of Production Research, 57, 2642-2655 (2019) · doi:10.1080/00207543.2019.1567950 |
| [33] | X. Qian, F. T. Chan, J. Zhang, M. Yin and Q. Zhang, Channel coordination of a two-echelon sustainable supply chain with a fair-minded retailer under cap-and-trade regulation, Journal of Cleaner Production, 244 (2020), 118715. |
| [34] | J. Qin; Y. Han; G. Wei; L. Xia, The value of advance payment financing to carbon emission reduction and production in a supply chain with game theory analysis, International Journal of Production Research, 58, 200-219 (2020) · doi:10.1080/00207543.2019.1671626 |
| [35] | A. Ranjan; J. K. Jha, Pricing and coordination strategies of a dual-channel supply chain considering green quality and sales effort, Journal of Cleaner Production, 218, 409-424 (2019) · doi:10.1016/j.jclepro.2019.01.297 |
| [36] | S. Sayman; S. J. Hoch; J. S. Raju, Positioning of store brands, Marketing Science, 21, 369-477 (2002) · doi:10.1287/mksc.21.4.378.134 |
| [37] | J. Su; C. Li; Q. Zeng; J. Yang; J. Zhang, A green closed-loop supply chain coordination mechanism based on third-party recycling, Sustainability, 11, 1-14 (2019) |
| [38] | T. A. Taylor, Supply chain coordination under channel rebates with sales effort effects, Marketing Science, 48, 992-1007 (2002) · Zbl 1232.90198 · doi:10.1287/mnsc.48.8.992.168 |
| [39] | J. T. Teng; K. R. Lou; L. Wang, Optimal trade credit and lot size policies in economic production quantity models with learning curve production costs, International Journal of Production Economics, 155, 318-323 (2014) · doi:10.1016/j.ijpe.2013.10.012 |
| [40] | W. Tong; D. Mu; F. Zhao; G. P. Mendis; J. W. Sutherland, The impact of cap-and-trade mechanism and consumers’ environmental preferences on a retailer-led supply Chain. Resources, Conservation and Recycling, 142, 88-100 (2019) · doi:10.1016/j.resconrec.2018.11.005 |
| [41] | Y. C. Tsao, Channel coordination under two-level trade credits and demand uncertainty, Applied Mathematical Modelling, 52, 160-173 (2017) · Zbl 1480.90067 · doi:10.1016/j.apm.2017.07.046 |
| [42] | Y. C. Tsao, Coordinating contracts under default risk control-based trade credit, International Journal of Production Economics, 212, 168-175 (2019) · doi:10.1016/j.ijpe.2019.02.018 |
| [43] | Y. C. Tsao; G. J. Sheen, Effects of promotion cost sharing policy with the sales learning curve on supply chain coordination, Computers & Operations Research, 39, 1872-1878 (2012) · Zbl 1251.90041 · doi:10.1016/j.cor.2011.07.009 |
| [44] | J. Tu, Z. Sun and M. Huang, Supply chain coordination considering e-tailer’s promotion effort and logistics provider’s service effort, Journal of Industrial and Management Optimization, (2020). · Zbl 1499.91048 |
| [45] | Warren, Audrey, Peers and Martin, Video retailers have day in court, Wall Street Journal-Eastern Edition, (2002). |
| [46] | Z. Wang, A. Brownlee and Q. Wu, Production and joint emission reduction decisions based on two-way cost-sharing contract under cap-and-trade regulation, Computers & Industrial Engineering, 146 (2020), 106549. |
| [47] | T. Xiao; T. M. Choi; T. C. E. Cheng, Product variety and channel structure strategy for a retailer-Stackelberg supply chain, European Journal of Operational Research, 233, 114-124 (2014) · Zbl 1339.90177 · doi:10.1016/j.ejor.2013.08.038 |
| [48] | J. Xu; Y. Chen; Q. Bai, A two-echelon sustainable supply chain coordination under cap-and-trade regulation, Journal of Cleaner Production, 135, 42-56 (2016) · doi:10.1016/j.jclepro.2016.06.047 |
| [49] | S. Xu and L. Fang, Partial credit guarantee and trade credit in an emission-dependent supply chain with capital constraint, Transportation Research Part E: Logistics and Transportation Review, 135 (2020), 101859. |
| [50] | L. Yang; J. Ji; M. Wang; Z. Wang, The manufacturer’s joint decisions of channel selections and carbon emission reductions under the cap-and-trade regulation, Journal of Cleaner Production, 193, 506-523 (2018) · doi:10.1016/j.jclepro.2018.05.038 |
| [51] | L. Yang; Q. Zhang; and J. Ji, Pricing and carbon emission reduction decisions in supply chains with vertical and horizontal cooperation, International Journal of Production Economics, 191, 286-297 (2017) · doi:10.1016/j.ijpe.2017.06.021 |
| [52] | B. Zhang; L. Xu, Multi-item production planning with carbon cap and trade mechanism, International Journal of Production Economics, 144, 118-127 (2013) · doi:10.1016/j.ijpe.2013.01.024 |
| [53] | Y. Zhou; X. Ye, Differential game model of joint emission reduction strategies and contract design in a dual-channel supply chain, Journal of Cleaner Production, 190, 592-607 (2018) · doi:10.1016/j.jclepro.2018.04.133 |
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. In some cases that data have been complemented/enhanced by data from zbMATH Open. This attempts to reflect the references listed in the original paper as accurately as possible without claiming completeness or a perfect matching.
