Developing Decision Models for Sustainable Supply Chain Coordination and Cooperation(3/3)

Sustainability is not only the issue of corporate social responsibility, but the core strategic issue. Treating sustainability as integral to operations, companies can recognize and manage trade-offs or conflicts between business surplus and environmental concerns. In supply chain activities such as design, sourcing, production, transportation, storage, distribution, sales, collection of end-of-use cores, remanufacturing, reverse logistics, etc., the firms need to simultaneously consider balances of operational cost and environmental cost under various environmental policies and trading schemes. It is a challenging and an opportunity as well. The managerial literature has documented many of the successful cases that transform the sustainability challenging into innovation and profit-boosting opportunity. The sustainability quantitative work published in major OR/OR journals has also grown 24.5 percent annually since year 1994. The proposal intends to address such a cooperative supply chain framework by developing quantitative decision models that provide managerial implications to decision-maker in sustainable supply chain management. The proposed models are theoretical innovation and practical as well.The proposed research deals with forward, reverse, and closed-loop supply chains under simplified two- or three-echelon setting. The possible decisions embedded in the models include equipment investment, process and technology selection, material sourcing, transportation mode selection, wholesale price, collection effort, retail price, production or replenish quantity, and distribution cycle. By doing so, the supply chain can be optimized and achieve Pareto improvement among participants. The study will also construct the efficient frontier under which the decision-makers can choose the optimal strategic position by balancing the cost and environment. The channel members will be mutually beneficial by capturing the key trade-offs and interactions of the entities in their decision-making procedure.The first part of the proposal (the first year) will investigate a forward supply chain under one-period setting and deterministic demand, and possibly consider other forms of demand function and setting. The coordination mechanisms under consideration are wholesale price, revenue-sharing, quantity discount, etc. To prevent from distractions, we will assume a simplified two-echelon channel structure consisting of one manufacturer and one retailer, inwhich the manufacturer acts as the Stackelberg game leader, and the retailer acts as the follower. Under such a basic setting, we will formulate the problem as an optimization model, derive equilibrium solutions, and provide critical managerial implications. The second part of the proposal (the second year) will extend the research by dealing with reverse supply chains under various coordination mechanisms, such as the revenue sharing, the trade-ins, and the leasing contracts. We will also attempt to apply the proposed methodology and analytic results to a more complicated structure and setting under various contractual agreements between the channel members. The last part of the proposal (the third year) will extend the research by dealing with a closed-loop supply chain under various coordination mechanisms, such as the revenue sharing, quantity discount, the trade-ins, and the leasing contracts. We will also attempt to apply the proposed methodology and analytic results to a more complicated supply chain structure under various contractual agreements between the channel members. The study will construct the efficient frontier under dimensions of operational cost and environmental cost, provide strategic choice, investigate possible Pareto-improving potential and system-wide benefits.The proposed research contributes to the extant literature in carrying out an innovative theoretic research and in-depth analysis in a sustainable supply chain context. This study will provide profound