Green Supply Chain Newsvendor Model and Analysis under Multiplicative Random Demand

Abstract

In this paper, we investigate the performance of green supply chain newsvendor model under multiplicative random demand. In our model, the green supply chain consists of one manufacturer and one retailer. The manufacturer acts as a leader, which decides the variables: production quantity, wholesale price and green-level; the retailer acts as a follower, decides on the retail price. Centralized and decentralized optimal solutions are obtained to optimize the manufacturer's production, stocking and green-level decision while anticipating the retailer's price optimization decision. Through research, it is found that the stocking factor decreases with the increasing price elasticity and is not affected by the green-level elasticity; Lower price elasticity will increase the optimal selling price of the green product, while green-level elasticity has no effect on the price; Larger price elasticity or green-level elasticity will increase the optimal green-level of the green product; Lower price elasticity or higher green-level elasticity will increase the overall profitability of the supply chain; Profit sharing between manufacturer and retailer under the decentralized model only depends on price elasticity and green-level elasticity; The greater price elasticity, the more beneficial to the retailer, the greater the green-level, the more beneficial to the manufacturer.