Optimal Green Operation and Information Leakage Decisions under Government Subsidy and Supply Uncertainty

Abstract

This study investigated optimal green operation and information leakage decisions in a green supply chain system. The system consists of one supplier, one leader retailer 1, one follower retailer 2, and the government. In this system, the government subsidizes each retailer based on the selling price of the product. The supplier is subject to a yield uncertainty process. The suppler decides whether to leak leader retailer 1′s order quantity to follower retailer 2 or not. In this study, we first built a Stackelberg game to address the equilibrium green operation decisions, when the supplier has and has not information leakage behavior, respectively. Subsequently, we identify the supplier’s information leakage equilibrium and how such behavior affects retailers’ ex ante profits, consumer surplus, and social welfare through a numerical study. Interestingly, we obtained the following results: (1) Supplier leaks are the unique equilibrium of the supplier. The product’s green degree and wholesale price at supplier’s equilibrium are higher under information leakage than under no information leakage. (2) The supplier’s information leakage behavior is good for leader retailer 1 and bad for follower retailer 2. (3) Information leakage behavior increases both consumer surplus and social welfare under certain conditions. (4) In general, key system parameters (e.g., the subsidy rate, supply uncertainty, supply correlation, and forecast accuracies) positively correlate with consumer surplus and social welfare in the same direction, while they affect retailer 1′s and retailer 2′s ex ante profit in the opposite direction. These findings provide useful insights for businesses to manage demand forecast information and make decisions on the green level of the product in green supply chain management.

Robust Emission Reduction Strategies under Cap-and-Trade and Demand Uncertainty

“…Emission Reduction Strategies Remanufacturing Improve Greening Level Qian et al [12] Peng et al [13] Kim et al [18] Wu and Shang [24] He et al [27] Wang et al [29] Zhang et al [35] Mondal and Giri [36] this study…”

“…The prevailing volatility in the business environment is one of the major factors that impact the operations management of manufacturers [16]. Many researchers have discussed manufacturers' operational decision making in consideration of demand uncertainty [13][14][15][17][18][19][20][21][22][23][24]. Ramezani et al [17] developed a stochastic multi-objective optimization model to identify Pareto equilibrium under an uncertain environment in which prices, costs, market demands, and return rates are uncertain.…”

“…Li and Li [23] considered the financial constraints and demand uncertainty of sustainable supply chain members and proposed a revenue-sharing (RS) and buy-back (RSBB) contract to coordinate the supply chain. Wu and Shang [24] modeled a green supply chain consisting of a supplier, a government, a leader retailer, and a follower retailer to investigate the greening operational decisions and information leakage decisions under demand uncertainty. They concluded that consumer surplus and social welfare will decline as the uncertainty of the supply chain increases.…”