Coordination Contracts for Two-Echelon Supply Chain with Price-and-Carbon-Emission Dependent Demand

Abstract

As consumers’ demand for low carbon products is growing, we develop a two-echelon supply chain with price-and-carbon-emission dependent demand consists of a dominant manufacturer and a retailer, and compare the optimal price and carbon emission and profit under the centralized and decentralized scenarios. Based on the manufacturer who wants to coordinate the whole supply chain, two different coordination contracts are proposed. We find that these two contracts not only improve profits of both sides, but also have the effect of carbon reduction. Finally we validate the effectiveness and environmental of these contracts through numerical examples.