Balancing price and green quality in presence of consumer environmental awareness: a green supply chain coordination approach

Jafar Heydari, Kannan Govindan*, Zahra Basiri

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

This study analyses the green channel coordination problem in a two-echelon supply chain where demand is a function of the selling price and the product’s green quality. The retailer decides on the selling price while the manufacturer regulates the green quality of the product. To initiate the channel coordination and to establish a win-win outcome for both parties, a hybrid of ‘greening cost sharing’ and ‘revenue sharing’ contract (HGRS) is developed. This study contributes to the literature by providing an analytical approach to address the channel coordination and pricing issues in a green supply chain under the consumer environmental awareness while the manufacturer has the ability of enhancing, with investments, the product’s green quality. Our study reveals that: (a) the proposed HGRS contract is capable of achieving channel coordination while both supply chain members gain more profit than in decentralised decision making, (b) the new suggested contract enhances the product’s green quality, reduces the selling price, and stimulates the market demand, and (c) HGRS contract results in more satisfied customers (by offering low prices) as well as more sustainable operations (by increasing greenness level) at the same time.

Original languageEnglish
JournalInternational Journal of Production Research
Volume59
Issue number7
Pages (from-to)1957-1975
ISSN0020-7543
DOIs
Publication statusPublished - 2021

Keywords

  • consumer environmental awareness
  • environmental quality
  • green supply chain
  • revenue sharing
  • Supply chain coordination

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