Supply chain networks with corporate social responsibility through integrated environmental decision-making

In this paper we develop a framework for the modeling and analysis of supply chain networks with corporate social responsibility through integrated environmental decision-making. We consider the multicriteria decision-making behaviour of the various decision-makers (manufacturers, retailers, and consumers), which includes the maximization of net returns, the minimization of emissions (waste), and the minimization of risk. Increasing levels of social responsibility activities between decision-makers are assumed to reduce transaction costs, waste, as well as risk. We derive the optimality conditions, define the equilibrium state for the supply chain network, and derive the equivalent finite-dimensional variational inequality, the solution of which yields the equilibrium product flows transacted between the tiers of the supply chain network as well as the nodal prices. We then utilize the variational inequality formulation to provide qualitative properties of the equilibrium flow and price patterns and to propose a computational scheme, which is then applied to compute the solution to several numerical examples.