A three-layer supply chain coordination in socially responsible distribution system

Abstract

This paper deals with channel coordination in a socially responsible distribution system comprising of a manufacturer, multiple distributors and multiple retailers under each distributor. The manufacturer intends to swell stakeholder welfare by exhibiting corporate social responsibility (CSR). Demand at the retailers’ end is linear function of price and is influenced by the manufacturer's suggested retail price. In manufacturer-Stackelberg game setting, a new revenue sharing (RS) contract is used to resolve channel conflict and win–win wholesale price and RS fraction ranges are identified in closed forms. It is found that the manufacturer's and the distributors’ wholesale prices of the RS contract are negative when the manufacturer's CSR practice is above of some thresholds. So, the manufacturer's pure profit may be negative though the distributors’ profits are positive because they receive some consumer surplus from the manufacturer.