The optimal strategies in the supply chain with stochastic demand sensitivity to carbon emission

With the increasing awareness of low-carbon environmental protection, consumers prefer to purchase low-carbon products. In this paper, a two-echelon low-carbon supply chain consisting of one manufacturer and one retailer in classic single-period model with emission-sensitive stochastic demand is investigated. Firstly, optimal results for the decentralized and centralized decisions in the basic model are presented respectively. It manifests the effect of double marginalization which shows not only a lower order quantity but also higher unit carbon emission. Then, we are going to discuss the introduction of a buyback and cost-sharing contract, and two main carbon emission regulations in the decentralized model. Finally, compared with the basic model, numerical examples are studied on the optimal solutions to the total profit for the supply chain, order quantity, and unit/total carbon emission as the demand sensitivity to carbon emission/green investment coefficient/demand variance varies respectively before reaching several significant conclusions.