An inventory system with coordination among manufacturers and retailers under buyback contract, vertical integration, retailer’s effort and carbon footprint constraint

Abstract

ABSTRACT The growing concerns about the Earth’s climate system and the increasing importance of saving raw materials are critical challenges that supply chain members mostly face, leading companies to sustainability and ‘going green’ missions. Environmentally friendly inventory management is one of the most crucial and key decisions that creates innovative methodologies to achieve green growth. Hence, in this study, we analyse a newsvendor problem among manufacturers and retailers under random demand to facilitate sustainable and green growth approaches. In our analytical model, two ways are considered to meet the needs of retailers. In the first case, the retailer orders before the sales season, so the remanufacturer will have enough time to remanufacture returned products and provide the retailer’s needs with recycled materials. In the second case, the retailer will re-order after the start of the sales season in the face of a shortage. So, the remanufacturer will not have enough time to supply the retailer with returned materials, and the retailer’s order will be met with new products using raw materials. The model intends to study the effects of carbon footprint constraints, vertical integration, buyback contract, and retailer’s sales effort on inventory control systems with remanufacturers. Furthermore, sensitivity analysis is performed, and conclusions and future research directions are provided.