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

Author

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  • Xia Zhao

    (Center for Food Security and Strategic Studies, Nanjing University of Finance and Economics, Nanjing 210003, P. R. China)

  • Ning Li

    (Collaborative Innovation Center of Modern Grain Circulation and Safety, Nanjing University of Finance and Economics, Nanjing 210003, P. R. China)

  • Liang Song

    (Collaborative Innovation Center of Modern Grain Circulation and Safety, Nanjing University of Finance and Economics, Nanjing 210003, P. R. China)

Abstract

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.

Suggested Citation

  • Xia Zhao & Ning Li & Liang Song, 2019. "Coordination of a Socially Responsible Two-Stage Supply Chain Under Random Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 36(05), pages 1-27, October.
    • Handle: RePEc:wsi:apjorx:v:36:y:2019:i:05:n:s0217595919500295
    DOI: 10.1142/S0217595919500295
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    References listed on IDEAS

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    Cited by:

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    3. Syed Asif Raza, 2020. "Price Differentiation and Inventory Decisions in a Socially Responsible Dual-Channel Supply Chain with Partial Information Stochastic Demand and Cannibalization," Sustainability, MDPI, vol. 12(22), pages 1-42, November.

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