Decision-making in sustainable dual-channel supply chain under carbon trading, risk aversion, and government subsidy policy

In the context of global warming, emissions of greenhouse gases, and growing environmental awareness, decision-making in sustainable supply chains becomes critical, focusing on incorporating re-manufacturing for ecological protection and resource utilization. This paper focuses on a multi-layer sustainable closed-loop supply chain model (SCLSC) under demand uncertainty and govt. subsidy in green manufacturing. Firstly, we formulate a closed-loop framework comprising a green supplier, risk-averse upstream manufacturer, risk-averse downstream retailer, and environmentally conscious collector. Secondly, we incorporate measures aimed at reducing carbon emissions within the supply chain that align with broader sustainability objectives. Thirdly, the influence of government subsidy in green manufacturing activities have been studied. Market demand is sensitive to price, cross-price, green degree, carbon emission levels, and the level of collector’s effort. To achieve the pricing, greening, and effort decision, we analyzed the CLSC model under i)consistency ii)inconsistency pricing strategy. Furthermore, to achieve the best profitability, we demonstrated the supply chain under manufacturer-retailer(MR), manufacturer-collector(MC), and retailer-collector(RC), including decentralized scenarios. The analytical results reveal that the manufacturer-collector coalition can optimize the utilization of resources such as transportation, storage, and processing facilities with higher green levels and supply chain profitability. The numerical illustration also reveals that the inconsistent pricing strategy enables businesses to respond to changes in demand and supply, maximizing revenue potential. In addition, risk-averse behavior reduces uncertainty but negatively impacts the overall performance of the supply chain. Finally, some managerial insights into effective parameters have been discussed to illustrate the sustainability initiatives.