A vendor-buyer supply chain model with price, warranty and green sensitive demand under greening cost, warranty cost and revenue sharing contract

This article considers a vendor-buyer supply chain model where the customer demand depends on selling price, green level and warranty period of the product. The production rate of the vendor is known and greater than the market demand. The production process is imperfect and it may yield some non-conforming items due to machine shift from an in-control state to an out-of-control state during a production run. Successive deliveries from the vendor are scheduled at a fixed time interval wherein the subsequent shipment appears when the buyer's inventory from former delivery has just been cleared out. A hybrid greening cost, warranty cost and revenue sharing (HGWRS) contract is introduced, which provides more profit to individual members than their decentralised profits. The numerical study reveals that, under HGWRS contract, customers are influenced to buy a more reliable product at a lower price with higher green level. A sensitivity analysis is also carried out to examine the impact of key model-parameters on the optimal results.