Two-stage stochastic pricing and coordinating problem in a stochastic sustainable supply chain considering deterioration and carbon cap-and-trade regulation

Due to the rapid growth of industrial activities worldwide and the importance of sustain- able supply chain management in controlling carbon emissions, this study examines the pricing and coordination issues of a two-stage sustainable supply chain for deteriorating products, including one manufacturer and one retailer. Assuming two productions and selling periods, the manufacturer has to adopt the governmental carbon cap-and-trade regulation due to using some equipment during the production period. Centralized and decentralized scenarios are solved precisely and heuristically con- sidering a stochastic demand. According to the analytical results, to design a cooperation rule between the members, two-part tariff (TPT) and two-part tariff-option (TPTO) contracts are proposed to coor- dinate chain decisions. Due to existing constraints defined during problem analysis, three new heuristic algorithms are developed to analyze the decentralized case and two contract problems. In addition to coordinating the problem and representing win–win outcomes using two contracts, numerical results show that TPT is more competent and gives win–win outcomes for all experiments. Also, it is more profitable for the manufacturer as the game leader. The experimental results prove that this problem is highly sensitive regarding parameter changes.