Carbon sensitive consumers and supply chain coordination, Newsboy problem

This paper studies channel conflict problem under emission sensitive demand patterns through a revenue-sharing contract between a single retailer and a manufacturer in a single-period newsvendor problem. The proposed model is investigated under three different decision-making scenarios, centralized, decentralized, and contract coordinated. To come up with a win-win solution, a revenuesharing contract is designed by the manufacturer to be offered to the retailer. The proposed revenuesharing contract has more flexibility than price protection, in that the optimal revenue sharing ratio can be settled reasonably through negotiation between the retailer and wholesaler. A set of sensitivity analysis is conducted to discuss the applicability of the proposed model. The results indicate that the channel coordination is achievable if the revenue sharing ratio is high enough to compensate the retailer’s loss in switching from decentralized decision-making to the coordinated decision-making.