Contents

Declaration iii

Certificate v

Dedication viii

Acknowledgments ix

Abstract xii

List of Figures xvii

List of Tables xix

List of Acronyms/Abbreviations xxi

List of Symbols xxiv

1 Introduction 1
1.1 Green product innovation under various procurement strategies . . . 3
1.1.1 Green supply chain management (GSCM) . . . . . . . . . . . 3
1.1.2 Green product design: DIGPs and MIGPs . . . . . . . . . . . 4
1.1.3 Strategic inventory . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1.4 Power structure among supply chain participants . . . . . . . 7
1.1.5 Research gaps addressed in the first problem . . . . . . . . . . 8
1.2 Replenishment and preservation technology investment strategy of a
retailer under the price, displayed inventory level, and rebate dependent
consumer demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2.1 Reference price effect of price-and-rebate pair . . . . . . . . . 9
1.2.2 Effects of inventory display on consumer demand . . . . . . . 11
1.2.3 Preservation technology investment . . . . . . . . . . . . . . . 11
1.2.4 Research gaps addressed in the second problem . . . . . . . . 12
1.3 Organization of the thesis . . . . . . . . . . . . . . . . . . . . . . . . 13

2 Materials and methods 15

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 2.1 Non-linear optimization . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Static optimization and game theory . . . . . . . . . . . . . . . . . . 16
2.2.1 Game theory in perspective of supply chain . . . . . . . . . . 17
2.2.2 Non-cooperative game . . . . . . . . . . . . . . . . . . . . . . 17
2.2.3 Existence of equilibrium . . . . . . . . . . . . . . . . . . . . . 19
2.2.4 Hessian matrix and concavity . . . . . . . . . . . . . . . . . . 20
2.3 Optimal control theory . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.3.1 Some basic concepts of optimal control theory . . . . . . . . . 21
2.3.2 Evolutionary algorithm . . . . . . . . . . . . . . . . . . . . . . 22

3 Influence of retailers procurement strategies on the type of green-

ing investment decision by the manufacturer in a two-period sup-
ply chain 27
3.1 Model description and assumption . . . . . . . . . . . . . . . . . . . . 27
3.1.1 Model assumptions . . . . . . . . . . . . . . . . . . . . . . . . 27
3.1.2 Model description . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Optimal decisions under MS game . . . . . . . . . . . . . . . . . . . . 31
3.2.1 MS game for MIGPs with SI (MMPS) . . . . . . . . . . . . . 32
3.2.2 MS game for MIGPs without SI (MMNS) . . . . . . . . . . . 34
3.2.3 MS game for MIGPs with single procurement (MMS) . . . . . 35
3.2.4 MS game for DIGPs with SI (MDPS) . . . . . . . . . . . . . . 37
3.2.5 MS game for DIGPs without SI (MDNS) . . . . . . . . . . . . 38
3.2.6 MS game for DIGPs with single procurement (MDS) . . . . . 39
3.2.7 MS game for TPs with SI (MTPS) . . . . . . . . . . . . . . . 40
3.2.8 MS game for TPs without SI (MTNS) . . . . . . . . . . . . . 41
3.2.9 MS game for TPs with single procurement (MTS) . . . . . . . 41
3.3 Optimal decisions under RS game . . . . . . . . . . . . . . . . . . . . 42
3.3.1 RS game for MIGPs with SI (RMPS) . . . . . . . . . . . . . . 42
3.3.2 RS game for MIGPs without SI (RMNS) . . . . . . . . . . . . 44
3.3.3 RS game for MIGPs with single procurement (RMS) . . . . . 45
3.3.4 RS game for DIGPs with SI (RDPS) . . . . . . . . . . . . . . 46
3.3.5 RS game for DIGPs without SI (RDNS) . . . . . . . . . . . . 48
3.3.6 RS game for DIGPs with single procurement (RDS) . . . . . . 48
3.3.7 RS game for TPs with SI (RTPS) . . . . . . . . . . . . . . . . 51
3.3.8 RS game for TPs without SI (RTNS) . . . . . . . . . . . . . . 51
3.3.9 RS game for TPs with single procurement (RTS) . . . . . . . 52
3.4 Optimal decisions under Nash game . . . . . . . . . . . . . . . . . . . 53

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 3.4.1 Nash game for MIGPs with SI (NMPS) . . . . . . . . . . . . . 54
3.4.2 Nash game for MIGPs without SI (NMNS) . . . . . . . . . . . 56
3.4.3 Nash game for MIGPs with single procurement (NMS) . . . . 56
3.4.4 Nash game for DIGPs with SI (NDPS) . . . . . . . . . . . . . 57
3.4.5 Nash game for DIGPs without SI (NDNS) . . . . . . . . . . . 59
3.4.6 Nash game for DIGPs with single procurement (NDS) . . . . . 60
3.4.7 Nash game for TPs with SI (NTPS) . . . . . . . . . . . . . . . 62
3.4.8 Nash game for TPs without SI (NTNS) . . . . . . . . . . . . . 62
3.4.9 Nash game for TPs with single procurement (NTS) . . . . . . 63
3.5 Impact of power structure and procurement strategies on green product
types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.6 Experimental results . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.7 Summary and concluding remarks . . . . . . . . . . . . . . . . . . . . 78

4 Influence of type of rebates on the profitability of the retailer for

deteriorating products 81
4.1 Model description and assumption . . . . . . . . . . . . . . . . . . . . 81
4.1.1 Model assumptions . . . . . . . . . . . . . . . . . . . . . . . . 81
4.1.2 Model description . . . . . . . . . . . . . . . . . . . . . . . . . 83
4.2 Static rebate strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.2.1 Static rebate based on demand variation(SUR) . . . . . . . . . 85
4.2.2 Static uniform rebate (SER) . . . . . . . . . . . . . . . . . . 86
4.2.3 Static rebate at third time-period only (STR) . . . . . . . . . 87
4.2.4 Under no rebate strategy (SNR) . . . . . . . . . . . . . . . . . 88
4.3 Dynamic rebate strategy . . . . . . . . . . . . . . . . . . . . . . . . . 89
4.3.1 Dynamic rebate in both second and third time intervals (DST) 89
4.3.2 Dynamic rebate in third time interval (DT) . . . . . . . . . . 93
4.4 A hybrid bat algorithm . . . . . . . . . . . . . . . . . . . . . . . . . . 94
4.5 Experimental results . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4.6 Summary and concluding remarks . . . . . . . . . . . . . . . . . . . . 101

5 Conclusions and future work 103

List of Publications 107

Biblography 109

A Appendix 121
A.1 Proof of Proposition 3.2.2 . . . . . . . . . . . . . . . . . . . . . . . . 121

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 A.2 Proof of Proposition 3.2.3 . . . . . . . . . . . . . . . . . . . . . . . . 122
A.3 Proof of Proposition 3.2.5 . . . . . . . . . . . . . . . . . . . . . . . . 123
A.4 Proof of Proposition 3.2.6 . . . . . . . . . . . . . . . . . . . . . . . . 124
A.5 Proof of Proposition 3.3.2 . . . . . . . . . . . . . . . . . . . . . . . . 125
A.6 Proof of Proposition 3.3.3 . . . . . . . . . . . . . . . . . . . . . . . . 125
A.7 Proof of Proposition 3.3.5 . . . . . . . . . . . . . . . . . . . . . . . . 126
A.8 Proof of Proposition 3.3.6 . . . . . . . . . . . . . . . . . . . . . . . . 127
A.9 Proof of Proposition 3.4.2 . . . . . . . . . . . . . . . . . . . . . . . . 128
A.10 Proof of Proposition 3.4.3 . . . . . . . . . . . . . . . . . . . . . . . . 129
A.11 Proof of Proposition 3.4.5 . . . . . . . . . . . . . . . . . . . . . . . . 130
A.12 Proof of Proposition 3.4.6 . . . . . . . . . . . . . . . . . . . . . . . . 130

B Appendix 133
B.1 Sensitivity analysis performed in Chapter 4 . . . . . . . . . . . . . . . 133

xvi
 List of Figures
1.1 Alternative fuel cars and LED lighting . . . . . . . . . . . . . . . . . 5
1.2 Lead acid car battery vs lithium ion car battery . . . . . . . . . . . . 5
1.3 Catalytic converter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.1 For λ = 1/2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.2 Multiple equilibrium points . . . . . . . . . . . . . . . . . . . . . . . 20

3.1 Scenario ikl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Dns Dps Ds
3.2 The profit of the retailer πrr (green), πrr (red), and πrr (gray) . . . 50
Dns Dps Ds
3.3 The profit of the manufacturer πmr (green), πmr (red), and πmr (gray) 51
kps
3.4 πrm where k = M, D, and T for MIGPs (red), DIGPs (green), and TPs
(blue), respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
kps
3.5 πmm where k = M, D, and T for MIGPs (red), DIGPs (green), and
TPs (blue), respectively . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.6 The products’ LGs under Scenarios MDPS (red), RDNS (green), and
NDNS (blue) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.7 Optimal SI and LG with respect to a . . . . . . . . . . . . . . . . . . 73
3.8 Profits with respect to a for MIGPs and DIGPs . . . . . . . . . . . . 74
3.9 Optimal SI and LG with respect to b . . . . . . . . . . . . . . . . . . 74
3.10 Profits with respect to b for MIGPs and DIGPs . . . . . . . . . . . . 75
3.11 Optimal SI and LG with respect to c . . . . . . . . . . . . . . . . . . 75
3.12 Profits with respect to c for MIGPs and DIGPs . . . . . . . . . . . . 75
3.13 Optimal SI and LG with respect to h . . . . . . . . . . . . . . . . . . 76
3.14 Profits with respect to h for MIGPs and DIGPs . . . . . . . . . . . . 76
3.15 Optimal SI and LG with respect to µ1 . . . . . . . . . . . . . . . . . 76
3.16 Profits with respect to µ1 for MIGPs and DIGPs . . . . . . . . . . . . 77

4.1 I(t) and R(t) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

4.2 πsur vs πdst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

xvii
 List of Tables
4.1 Optimal retail price, time intervals, rebates, IPT , order quantity, and
profit under static rebate environment. . . . . . . . . . . . . . . . . . 98
4.2 Optimal retail price, time intervals, rebates, IPT , order quantity, and
profit under dynamic rebate environment. . . . . . . . . . . . . . . . 98

B.1 Sensitivity analysis of πdst . . . . . . . . . . . . . . . . . . . . . . . . . 133

B.2 Sensitivity analysis of πsur . . . . . . . . . . . . . . . . . . . . . . . . 134

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 List of Abbreviations

LG level of greenness
SI strategic inventory
GSCM green supply chain management
MS manufacturer-Stackelberg game
RS retailer-Stackelberg game
DIGP development-intensive green product
MIGP marginal-cost intensive green product
TP traditional type product
DIL displayed inventory level
IPT investment in preservation technology
BA bat algorithm
HBA hybrid bat algorithm

xxi
 List of Symbols

i green supply chain models under the MS(M), RS(R),

and Nash(N) game, i = m, r, n
j number of selling periods, j = 1, 2
k DIGPs(D), MIGPs(M), and TPs(T) green product types, k = D, M, T
l presence of SI(PS), no SI(NS), single lot(S) procurement strategies, l = ps, ns, s
a market potential
b price sensitivity of consumer demand
c consumer sensitivity to LG
cm unit marginal cost
µ1 manufacturer efficiency to greening investment for DIGPs
µ2 manufacturer efficiency to greening investment for MIGPs
pkl
ij retail price per unit
mkl
rj profit margin of the retailer
kl
wij wholesale price per unit, l = ps, ns
wikl wholesale price per unit for single lot procurement strategy
kl
πmi2 manufacturer’s profit in second-period, l = ps, ns
kl
πri2 retailer’s profit in second-period, l = ws, ni
kl
πmi manufacturer’s total profit in two consecutive selling periods, ∀ l
kl
πri retailer’s total profit in two consecutive selling periods, ∀ l
Qkl
i total sales volume in two consecutive selling periods
Iikl amount of SI
ϑkl
i products LG

xxiii
pt retail price per unit at time t ∈ [0, T ] for deteriorating items
S0 initial order quantity (S0 ≥ S1 )
t1 point of time at which inventory level reaches S1 , I(t1 ) = S1
t2 point of time at which inventory level reaches S2 , I(t2 ) = S2
T length of the replenishment cycle
ψ preservation technology investment in the replenishment cycle (ψ ≥ 0)
R1 (t) dynamic/static rebate rate at any time t ∈ [t2 , T ]
R2 (t) dynamic/static rebate rate at any time t ∈ [t1 , t2 ]
I(t) inventory level at any time t ∈ [0, T ]
Sc replenishment cost per order
cp per unit purchasing cost
h per unit inventory holding cost per unit time
cd unit disposal cost per unit
γ1 sensitivity of consumers with rebate at time t ∈ [t2 , T ]
γ2 sensitivity of consumers with rebate at time t ∈ [t1 , t2 ]
ρ(ψ) deterioration rate coefficient under preservation technology investment ψ
ρ0 deterioration rate under natural condition
ρ1 minimum deterioration rate under preservation technology investment
πsv profit of the retailer in different scenarios under static environments
where v = ur, er, tr, nr represents Scenarios SER, SUR, STR, SNR, respectively
πdv profit of the retailer in different scenarios under dynamic environments
where v = st, t represents Scenarios DST, DT, respectively

xxiv