Beef Supply Chain Analysis Based on Carbon Emission Costs, under Revenue-sharing and Cost-sharing Contracts

Document Type : Research Paper

Authors

1 , Prof., Department of Industrial Engineering, Faculty of Industrial & Systems Engineering, Tarbiat Modares University, Tehran, Iran.

2 MSc., Department of Industrial Engineering, Faculty of Industrial & Systems Engineering, Tarbiat Modares University, Tehran, Iran.

Abstract

Objective: Food production and supply chains contribute significantly to carbon emissions. The beef supply chain is of those food industry sectors with significant carbon emissions in its entire supply chain. In this study, the beef supply chain is studied by considering carbon emissions under the coordination contracts and the key decisions of supply chain players.
Methods: The need to reduce emissions in energy consumption of upstream suppliers and downstream distributors encourages suppliers to do promotional work for manufacturing low-carbon products. Accordingly, the retailers would have the incentive to offer some encouraging schemes to the manufacturers, which stimulates the manufacturer's motivation to reduce emissions. In this research, price sensitivity, level of greenery, and the amount of advertising are considered to investigate the effects of these parameters on chain profitability of the chain and the decisions of the channel members. Cooperative Advertising contracts (CA), Revenue Sharing contracts (RS), and Cost Sharing contracts (CS) are also examined. Examining the decisions of supply chain actors and analyzing the results, the researchers proved that the increase in the effectiveness of green product advertisements pushes up the number of applicants for buying green products and makes the supply chain provide products with higher levels of greening.
Results: Based on the achieved results, corporate advertising contracts increase retail advertising investment and total supply chain profit. They also increase channel effectiveness. This study also discussed the key role of advertising and its effects on the profitability of the channel. The results shied that the best way to increase the demand for green products is to raise the awareness of customers about the environment through advertising. When consumers' sensitivity to the level of the greening of a product increases, they tend to pay higher prices for low-carbon products. In addition, this study asserts that a cost-sharing agreement is also beneficial for companies and the supply chain, since it increases the level of greenery in products, brings higher profits for individual companies, and increases supply chain profits.
Conclusion: This study comes with practical implications that can be used as support for decision-making. It indicated that a revenue-sharing contract with a low-performance difference after cost-sharing is a suitable option for the supply chain. Unlike the cost-sharing contract, almost all retail stores have computer systems and barcodes to track the sales of each meat product, so monitoring and verifying revenue is not a difficult task for the producer. A revenue-sharing contract not only helps the manufacturer and retailer achieve a "win-win" situation but also leads to a greater supply chain profit than a decentralized policy.

Keywords


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