585 / 2024-04-26 12:06:01

Supply Chain Coordination under CSR with Uncertain Demand Reward

corporate social responsibility (CSR),Newsboy problem,supply chain coordination

Operational decisions and supply chain coordination under Corporate Social Responsibility (CSR) are widely analysed in recent research papers. However, it is ignored that when the supplier acts CSR, the impact of CSR on demand (demand reward) is uncertain. We analyse the operational decisions and supply chain coordination under this condition in this work. We prove that the expected profit of a centralized supply chain is concave in the CSR effort and the order quantity. Thus a unique optimal group of the order quantity and the CSR effort exists. Ignoring the uncertainty of demand reward leads to simple decision conditions that the optimal CSR effort is independent of the demand uncertainties. However, we find that this simplification can cause remarkable profit loss. In fact, the optimal CSR effort increases with the uncertainty of the basic demand attribute but decreases with the uncertainty of demand reward. Moreover, the uncertainty of demand reward can lead to a zero optimal CSR effort. Then we investigated the decentralized operational decisions and supply chain coordination problem in the push mode and the pull mode. Under the push mode, we provide a combined CSR cost and revenue sharing contract to coordinate the supply chain. Under the pull mode, we find a CSR cost sharing contract for supply chain coordination. Numerical examples are used to show a few management insights.