Optimal Strategies for Green Supply Chains with Competition between Green and Traditional Suppliers

Abstract

We  consider a green supply chain that  consists of a traditional supplier, a green supplier, and a manufacturer. We investigate the optimal strategies for the suppliers' raw material prices, and the manufacturer's production and green raw material ordering. In particular, we consider three price competition models: the traditional supplier-led model, the green supplier-led model, and the Nash game model. The results indicate that the more dominant the green supplier, the more likely the green material price will be higher than the traditional material price. In addition, the manufacturers' product greenness level is the lowest under the green supplier-led model and the highest under the traditional supplier-led model. We also find that, as the manufacturer's yield uncertainty increases, the prices of traditional and green raw materials both decrease with respect to the manufacturer's product greenness level. Moreover, as customers' green preference increases, the price of green raw materials increases, the price of traditional raw materials decreases, and the product greenness level increases.