Track: Supply Chain and Logisitcs Case Study Competition

Abstract

In recent times, the world has experienced the rising importance of environmental friendliness in the textile and apparel industry. Examples of organizations such as Patagonia, Walmart, etc. signify this phenomenon. Motivated by this issue, here we design a dyadic environmental friendly textile supply chain comprising one apparel manufacturer and one apparel retailer under price and environmental friendliness sensitive demand. First, we design the supply chain under a centralized and a decentralized setting using wholesale price contract. Here, we determine the optimal greening level, wholesale price, retail price of the apparel. Then, we propose two mechanisms, i.e., cost-sharing and profit-sharing approach between the apparel manufacturer and the apparel retailer to improve the greening level of the apparel. Under these mechanisms, we determine the optimal greening level, wholesale price, retail price of the apparel. With the help of comparative analysis, we show that the greening level and the profitability of the supply chain members increase under these mechanisms compared to that under wholesale price contract, whereas profit-sharing mechanism emerges as the best option for both. Additionally, we demonstrate the impact of the customer’s green sensitiveness and the cost of greening production on the decision variables mentioned above.