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Pricing Strategy and Risk-Averse Flexibility in Sustainable Supply Chain: A Dual-Channel Logistics Process Under Reward Contracts and Demand Uncertainty

Author

Listed:
  • Abhijit Barman

    (Indian Institute of Management Raipur)

  • Ashis Kumar Chakraborty

    (Indian Statistical Institute)

  • Shib Sankar Sana

    (Kishore Bharati Bhagini Nivedita College)

  • Parthasarathi Banerjee

    (Indian Institute of Management Raipur)

Abstract

The critical nexus of sustainable manufacturing and logistics within the supply chain is pivotal for safeguarding the environment and navigating uncertain market landscapes. This study meticulously explores the intricate interplay between ecological commitments and the adaptability of risk coefficients, scrutinizing their impact on operational efficacy, production dynamics, and value chain optimization. Firstly, we have designed a dual-channel supply chain model that includes the supplier, green manufacturer, and sustainable retailer. Pricing and greening decisions across the multi-layered supply chain have been optimized meticulously by incorporating risk aversion effects into the utility function. Market demand is uncertain and highly sensitive to product price and level of green attributes. Secondly, in order to compare the optimal decision, the effectiveness of the supply chain has been analyzed under different business perspectives, which are centralized, decentralized, and rewards contracts with target green level with the help of the leader-follower Stackelberg game approach. The analytical results delve into the impact of supply chain contracts, revealing the way the retailer’s incentives shape manufacturer’s green initiatives and members’ risk aversion preferences. The numerical findings illustrate the manufacturer’s advancement in green manufacturing, achieving peak green product levels and higher profitability, contrasting centralized and decentralized marketing scenarios in the dual-channel model. Finally, some managerial insights with a sensitivity of major elasticity parameters have been addressed to achieve the performance of the supply chain.

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  • Abhijit Barman & Ashis Kumar Chakraborty & Shib Sankar Sana & Parthasarathi Banerjee, 2024. "Pricing Strategy and Risk-Averse Flexibility in Sustainable Supply Chain: A Dual-Channel Logistics Process Under Reward Contracts and Demand Uncertainty," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 25(4), pages 733-762, December.
    • Handle: RePEc:spr:gjofsm:v:25:y:2024:i:4:d:10.1007_s40171-024-00407-x
    DOI: 10.1007/s40171-024-00407-x
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    References listed on IDEAS

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