Return-refund strategy with coordination contracts in the e-commerce supply chain: a study under effects of digitalization and sustainable manufacturing

The seismic impact of the COVID-19 outbreak has accelerated the evolution of resilient supply chains, shedding light on the indispensable role of digitalization in this trans-formative journey. In tandem, a wave of e-commerce proliferation and a heightened environmental consciousness among consumers have prompted manufacturers to pivot towards eco-friendly production, seamlessly integrating their offerings into the vast realm of online platforms. This paper presents a decision-making model to deal with optimal pricing strategy, greening decision and return refund strategy for a two-echelon dual-channel green supply chain management, including a sustainable manufacturer with traditional and online retailers through e-commerce platform. Market demand is uncertain, and it is influenced by sales price, green degree, refund amounts and retailer’s advertisement effort. First, optimal product pricing and greening decisions of the supply channel members are addressed by examining both centralized and decentralized marketing scenarios. Second, two additional coordination mechanisms within the decentralized scenario, namely the cost-sharing and profit-sharing contracts, are incorporated to enhance overall supply chain profitability. Each participant in the supply chain makes decisions independently with the aim of maximizing the collective profit through the application of a non-collaborative Stackelberg game approach. Both analytical and numerical studies are conducted to verify and compare the optimal sales price, wholesale price, green level, and supply chain profit. The analytical results imply that first, (i) the decentralized scenario provides higher sales prices in the retail channel while the greening level of products is low. Secondly, (ii) the profit-sharing contracts enhance the supply chain profit compared to the decentralized model under sustainable manufacturing. In conclusion, we assess the best course of action across all conceivable scenarios and introduce a sensitivity examination, facilitating the reflection of critical parameter influences.