We analyze a brand's disclosure of its supplier list to improve the suppliers’ compliance with social and environmental sustainability standards. We develop a model of a buyer, a supplier, and an NGO; when a violation of the supplier occurs, the buyer and the supplier both incur penalties. Given that the disclosure influences the NGO's perception of the supplier and results in a different level of NGO scrutiny, the buyer decides whether to reveal her supplier. Our model characterizes the buyer's optimal revelation strategy and provides the equilibrium efforts of the supplier and the NGO. The results show that an increase in the penalty for the supplier or an increase in the NGO's auditing efficiency always gives the buyer an incentive to reveal the supplier and has a beneficial effect on supply chain sustainability. However, an increase in the penalty for the buyer acts as a deterrent to the revelation, and thus it often has a detrimental effect on sustainability, except when the increase is modest and the buyer makes an individual effort to monitor her supplier. Moreover, although an increase in the NGO's gain in utility from targeting a revealed supplier acts as a deterrent to the revelation, it can have either a beneficial or detrimental effect on sustainability, depending on the extent of the increase and the efficiency of the NGO's auditing. Last, if the buyer can invest in improving the supplier's capability, the above‐mentioned factors that have beneficial (detrimental) impacts on sustainability also make the investment more (less) worthwhile.
We study a supply chain involving a supplier–retailer relationship. When production lead-time is long and the selling season is short, the retailer has to place an order ahead of the season, which resembles the classical Newsvendor model. However, we consider the situation when the supplier agrees to deliver the order in multiple shipments in the season, and then the retailer needs to determine the quantity and/or timing of each shipment. Under a centralized setting, we derive the optimal quantity and/or timing decisions of the retailer. Under a decentralized setting, incentive misalignment arises from ineffective allocation of inventory costs between the parties, in addition to the well- known double marginalization effect. Hence, we devise an incentive contract, which involves a risk-sharing mechanism at the end of the season and an inventory subsidizing scheme for the entire season; in practice, the inventory subsidizing scheme can be implemented in different ways, such as a direct subsidizing scheme or a delayed-payment scheme. The proposed contract can achieve channel coordination and Pareto optimality. Furthermore, we can show that the inventory subsidizing scheme plays a key role in channel coordination because without the inventory subsidizing scheme, the loss of supply chain efficiency is almost always significant.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.