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Consumer environmental awareness and channel coordination with two substitutable products

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  • Zhang, Linghong
  • Wang, Jingguo
  • You, Jianxin

Abstract

This paper focuses on the impact of consumer environmental awareness (CEA) on order quantities and channel coordination within a one-manufacturer and one-retailer supply chain. The manufacturer produces two types of products: the environmental and the traditional products. These two products differ in their price and environmental quality. Based on the multi-product newsvendor model, this study compares three decision scenarios: the centralized model (M1), the decentralized model (M2), and the decentralized model with the coordination of a return contract (M3). The closed-form expressions of optimal order quantities, wholesale prices and return credits are derived for each scenario. Extending these models, we incorporate a production capacity constraint of the manufacturer. Finally, sensitivity analyses on model parameters are performed and numerical examples are provided.

Suggested Citation

  • Zhang, Linghong & Wang, Jingguo & You, Jianxin, 2015. "Consumer environmental awareness and channel coordination with two substitutable products," European Journal of Operational Research, Elsevier, vol. 241(1), pages 63-73.
    • Handle: RePEc:eee:ejores:v:241:y:2015:i:1:p:63-73
    DOI: 10.1016/j.ejor.2014.07.043
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