Volume 54, Number 5, September-October 2020
|Page(s)||1515 - 1535|
|Published online||23 July 2020|
Coordination contract for a competitive pharmaceutical supply chain considering corporate social responsibility and pricing decisions
School of Industrial Engineering, Iran University of Science and Technology, University Road, Hengam Street, Resalat Square, Narmak, Tehran, Iran
* Corresponding author: firstname.lastname@example.org
Accepted: 23 July 2019
Corporate social responsibility (CSR) and pricing decisions are proposed for a competitive two-level pharmaceutical supply chain (PSC) comprising two pharma-manufacturers and one pharma-retailer. In the investigated PSC, the pharma-manufacturers competitively invest in the CSR effort to produce a new medicine and sell two substitutable products to the market through the pharma-retailer, deciding on selling prices of manufacturers’ products. The PSC under consideration is modeled in three decision-making structures, i.e., decentralized, centralized, and coordinated models. In the decentralized model, the pricing and CSR decisions are individually obtained using a pharma-manufacturers–Stackelberg game structure. In the centralized model as a benchmark, the best performance of the entire PSC system is achieved. Finally, to encourage all PSC members to agree on the coordination plan, a CSR cost-sharing contract is proposed. Our results reveal that under competitive environment, the proposed CSR cost-sharing contract is able to increase market demand by significantly decreasing selling prices and increasing level of the CSR efforts.
Mathematics Subject Classification: 91A40 / 91A80 / 91B24
Key words: Pharmaceutical supply chain coordination / corporate social responsibility (CSR) / pricing / Stackelberg game / substitutable products / CSR cost-sharing contract
© EDP Sciences, ROADEF, SMAI 2020
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