The coordination mechanism of a risk-averse green supply chain

Abstract

Purpose This study aims to establish a centralized decision-making game model and manufacturer-led Stackelberg game model based on factors of risk aversion of supply chain members and product greenness. The research aims to study whether the introduction of the “cost + risk sharing” contract affects coordination of this type of green supply by calculating the optimal decision of each mode. Design/methodology/approach This research designs a supply chain model under centralized and decentralized decision-making. This model uses the Stackelberg game to calculate the optimal decision under decentralized decision-making to evaluate the effect of a green supply chain and then analyze the “cost + risk sharing” contract and the degree of coordination of the supply chain. A sensitivity analysis is conducted on the centralized mode for the impact of variables on the supply chain. Findings This research finds a double marginalization effect in decentralized decision-making, and the risk aversion coefficient plays a decisive role in the utility of supply chain members. The specific range of risk- and cost-sharing factors allows supply chain members to achieve Pareto improvements and provides decision-making based on the corresponding management strategies according to each other’s risk preference degree. Research limitations/implications The influence of each variable on the green supply chain in the centralized mode is studied by MATLAB numerical simulation. It provides reference for green supply chain members to formulate corresponding management strategies according to each other's risk preference degree. Originality/value This research innovatively considers manufacturers and retailers to explore the market demand for product greenness. It introduces a novel “cost + risk sharing” contract to coordinate the green supply chain.

Green supply chain finance strategies with market competition and financial constraints

“…The use of cost sharing contracts can help increase the greenness of the products and the retail price, which can increase the profitability of the green supply chain system [ 41 ]. Since all supply chain members are risk-averse, a “cost + risk-sharing” contract can coordinate the green supply chain and realize the Pareto optimization of each subject [ 42 ]. Instead, operations management predominantly assesses the impact of initial working capital and product costs on decision-making processes [ 43 ].…”

Performance Mapping of a Firm under Green Supply Chain Architectures-Integrated Operations

“…The computed fuzzy rating of individual 1 st level evaluation criteria can be calculated as (Equation. 6) (32,33) .…”

Porcelain Supply Chain Coordination Considering the Preferences of Consumers against the Background of E-Commerce

“…Consumer preferences for packaging were not considered in the study. [26,27] Constructed a manufacturer-led decentralized decision model to study supply chain coordination.…”

“…Among them, many studies considered the manufacturer as the dominant player. Wang et al [26] studied a manufacturer-led green supply chain model, whereas Yang et al [27] discussed a manufacturer-led supply chain coordination in the context of constantly updating demand information. Feng et al [28] studied the pricing and coordination of governmentled and manufacturer-led remanufacturing supply chains.…”