Stimulating sustainability investment level of suppliers with strategic commitment to price and cost sharing in supply chain

摘要

Sustainable development is a global issue requiring supply chain members to invest in sustainable technology to protect the environment. Manufacturers can motivate suppliers to increase sustainability investment level through various types of contracts, such as price commitment and cost-sharing contracts. In this context, we consider a two-echelon sustainable supply chain with a manufacturer and a supplier. We use price commitment as basis to study several scenarios, such as centralized/decentralized decision system, pure price commitment contract, commitment to wholesale price and cost-sharing contract, and two-part tariff contract. Accordingly, we mainly discuss if these contracts can improve the sustainability investment level of suppliers and if Pareto improvement can be achieved. Results show that the pure price commitment contract can neither improve suppliers sustainability investment level nor coordinate the supply chain. By contrast, with a combination on price and sharing ratio, commitment to wholesale price with cost sharing is beneficial in enhancing suppliers sustainability investment level and can achieve the Pareto improvement in profit for supply chain members. Lastly, numerical results reveal that main contract parameters, such as basic wholesale price, sensitivity of wholesale price to sustainability investment level, and coefficient of sustainability effect, greatly influence the profits of supply chain members. The commitment to wholesale price with cost-sharing contract can likewise achieve the Pareto improvement in a certain condition. (C) 2019 Elsevier Ltd. All rights reserved.