Coordination of promotional effort, corporate social responsibility and periodic review replenishment decisions in a two-echelon socially responsible supply chain

Abstract

In this paper, we explore the issue of coordination in a manufacturer-retailer supply chain where the manufacturer is socially responsible and invests in CSR activities. On the other hand, the retailer invests in promotional efforts and uses a periodic review order-up-to policy for replenishing items. First, the decentralized decision-making structure is modeled to calculate the minimum acceptable level for the members profit to accept coordination. Then, the centralized structure is formulated to obtain the benchmark solutions for the whole supply chain profitability. Afterwards, a cost-sharing (CS) contract is proposed to persuade the members to accept the centralized decision-making structure and to follow the benchmark solutions. The results of the sensitivity analyses demonstrated that the proposed coordination model is beneficial from three aspects, i. e. economic, environmental and social viewpoint, compared to the decentralized model. Furthermore, some outstanding managerial insights are provided which further illustrates the applicability of the proposed model.