Coordination of Green Supply Chain considering Fairness Concern and Distribution-free Approach

Firms that prioritize environmental considerations and actively embrace sustainability practices can achieve a significant competitive edge in the market. However, the high costs of investing in green initiatives and reducing short-term profit margins for investors can raise concerns about fairness. This paper examines fairness concerns within a green supply chain, featuring a manufacturer committed to fair profit distribution and a fairness-neutral retailer. The issue is analyzed using a distribution-free approach across different decision-making processes in the context of stochastic demand with partial information. Moreover, to achieve a win-win situation for all members involved, a profit-sharing through bargaining (PSB) contract is used. The results show that using a contract that allows the manufacturer to negotiate the profit-sharing percentage with the retailer can bring significant benefits. This coordination mechanism effectively addresses the manufacturer's concerns about fairness while enhancing product sustainability and green initiatives. Additionally, conducting sensitivity analyses on key parameters provides valuable managerial insights for decision-making.