Journal of Cleaner Production 285 (2021) 124872

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Competition and cooperation in the sustainable food supply chain

with a focus on social issues
Yashar Manteghi , Jamal Arkat *, Anwar Mahmoodi , Hamid Farvaresh
Department of Industrial Engineering, University of Kurdistan, Sanandaj, Iran

a r t i c l e i n f o a b s t r a c t

Article history: Additives are added to raw materials and products with purposes such as reduction of costs, improve-
Received 18 April 2020 ment of physical appearance and taste, and enhancement of shelf life. Overuse of additives causes health
Received in revised form problems for consumers and hence supply chain members must consider social consequences besides
8 September 2020
the economic goals in the specification of the amount of additives. Furthermore, the production and
Accepted 27 October 2020
delivery operations in the food supply chain constitute one of the leading causes of energy consumption
Available online 30 October 2020
and greenhouse gas (GHG) emissions. The reduction of GHG emissions increases cost, and a balance,
Handling Editor: Yutao Wang therefore, needs to be established between economic and environmental goals. In this study, three
pricing models are presented for a supply chain, including two suppliers and one manufacturer. Con-
Keywords: sumer health and the reduction of GHG emissions are investigated as the social and environmental
Food supply chain objectives, respectively, besides the supply chain members’ profit. While a centralized structure is
Pricing considered in the first model, the second and third models have decentralized structures. Unlike in the
Greenhouse gas emissions second model, where all the supply chain members compete with each other, an alliance is considered in
Sustainability
the third model between the first supplier and the manufacturer, competing with the other supplier. The
Game theory
equilibrium decisions are derived for each scenario using the game-theoretic approach. Moreover, the
impact of the supply chain structure on the carbon emissions, amount of additives, and agents’ profits are
investigated. A number of interesting insights have been revealed from these analyses. For example, it is
demonstrated that the government could set penalties for the addition of additives in specific ranges, as a
result of which the supply chain members would prefer not to add to additives. A numerical analysis is
carried out to present more insights into the effects of the main parameters. We found that the more
customer demand depends on price, the less the manufacturer will be motivated to reduce GHG emis-
sions. GHG emissions increase as government penalty for endangering consumer health rises. Alliances
between supply chain members are economically beneficial when product demand is dependent more
strictly on the reduction of GHG emissions.
© 2020 Elsevier Ltd. All rights reserved.

1. Introduction dimensions besides the economic goals to determine the amount of

Supply chain members pursue different goals, such as reducing
costs and increasing sales by adding additives to their raw materials
and products. There are some limitations to using such materials
because their overuse may cause health problems. The government
and the relevant associations must control the supply chain by
adopting different policies, such as penalties for supply chain
members. Supply chain members must consider the social
* Corresponding author.
E-mail addresses: y.manteghi@eng.uok.ac.ir (Y. Manteghi), j.arkat@uok.ac.ir, j.
arkat@uok.ac.ir (J. Arkat), anwar.mahmoodi@uok.ac.ir (A. Mahmoodi), farvaresh@
uok.ac.ir (H. Farvaresh).
additives (Song and Zhuang, 2018). A well-known case of the use of
harmful additives is the use of melamine in dairy products. Nitro-
gen percentage is measured to determine the amount of protein in
dairy products, and measuring the amount of protein in dairy
products is one way to measure their quality. Sanlu Company in
China added melamine instead of protein to increase the amount of
nitrogen in its products in 2008, and at least six children died
because of kidney stones. Lack of customer awareness and accuracy
in control encourages suppliers and producers to increase their
profits by overusing harmful additives. This strategy is profitable
for supply chain members in the short term, but it makes the
company unreliable for customers in the long run (Song and
Zhuang, 2017).

https://doi.org/10.1016/j.jclepro.2020.124872
0959-6526/© 2020 Elsevier Ltd. All rights reserved.
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
The concept of the sustainable supply chain was completed in
the 21st century through the consideration of three dimensions,
including the economic, environmental, and social dimensions
(Zhou and Qin, 2015). The sustainable supply chain is defined as the
management of the flow of materials, information, and capital
among the members to achieve sustainable development goals in
the three economic, social, and environmental aspects (Seuring and
Müller, 2008). The food industry has a critical role in increasing
GHG emissions and wasting resources as a primary consumer of
energy and resources. Resources are scarce, and demand for food
grows as population increases, so sustainability is an essential issue
in food supply chains. Environmental goals such as the reduction of
greenhouse gas emissions and waste of resources and social goals
such as the preservation of the diversity of resources and consumer
health must be considered for the food supply chain besides eco-
nomic goals such as the maximization of profits (Martínez-Guido
et al., 2018). These goals are sometimes in conflict with each
other, so it is crucial to decide on the variables related to these
goals. Supply chains are divided into two types of centralized and
decentralized chains in terms of the decision-making process. In a
centralized supply chain, all members depend on one organization
in terms of ownership and finance, and a decision-maker decides
about the common goals of the supply chain for all members. In a
decentralized supply chain, each member has the power to make
decisions, and there is competition between supply chain members
to reach their goals. Supply chain members can cooperate with
contracts or non-contract coordination methods to improve their
performance.
In this paper, we consider the three issues of sustainability,
cooperation, and competition for a food supply chain including one
manufacturer and two suppliers. It is assumed that the demand for
each product depends on the price, number of additives, and
amount of decrease in GHG emissions. The manufacturer is further
assumed to add additives to its products to increase profit, which
may be detrimental to consumers’ health. The government pre-
vents the overuse of additives by increasing fines. The manufac-
turer reduces GHG emissions to increase demand. GHG emissions
and overuse of additives endanger public health, so these two
criteria are considered simultaneously for a sustainable supply
chain. A rise in the use of additives increases cost for the manu-
facturer, whose tendency to reduce GHG emissions decreases due
to rising costs. The reverse is also true, where reduction of GHG to
increase demand leads to higher manufacturer costs, and limits the
use of additives. Decisions on reduction of GHG emissions and use
of additives affect the profits of supply chain members besides the
environmental and social aspects of the supply chain. It is therefore
necessary to consider the reduction of GHG emissions and the use
of additives together in order to balance the economic, environ-
mental, and social goals of a sustainable supply chain.
All the three dimensions of a sustainable supply chain are
considered in this study: supply chain members’ profit as the
economic dimension, consumers’ health as the social dimension,
and the reduction of greenhouse gas emissions as the environ-
mental dimension. The centralized and decentralized supply chains
are studied in three scenarios. In the first scenario, the centralized
supply chain is considered with the goal of maximizing total supply
chain profit. The decentralized supply chain is investigated for the
second and third scenarios. In the second scenario, supply chain
members compete to maximize profit. In the third scenario, a
decentralized supply chain is studied where the cooperation be-
tween the first supplier and the manufacturer is considered. Given
these assumptions, we tackle the following research questions.
1) How do supply chain structures affect sustainable aspects?
2
Journal of Cleaner Production 285 (2021) 124872
2) What is the difference between the consideration of competi-
tion and coalition among supply chain members in the
achievement of the sustainable aspects?
3) How do economic parameters affect other sustainable aspects?
4) How do social parameters impact other sustainable aspects?
5) How do environmental parameters affect the sustainable
aspects?
First, we review research on the topics of health, sustainability,
and competition in the food supply chain. Then, we focus on the
papers that have considered competition in closed-loop supply
chains, green supply chains, and sustainable supply chains.
Ahumada and Villalobos (2009) reviewed the research in the
area of the food-agricultural supply chain. They divided the articles
in terms of decisions, products, and uncertainty. After reviewing
the papers, they concluded that health, uncertainty, and risk
management were less emphasized in the food-agricultural supply
chain. Akkerman et al. (2010) reviewed articles in the field of food
distribution networks, and considered quality, health, and sus-
tainability as three major aspects. From the previous research, it is
concluded that researchers have less frequently investigated health
and sustainability, especially the environmental and social di-
mensions, in the food supply chain.
Rouviere (2010) addressed the health problems in the food
supply chain by considering both high-risk and low-risk states for
consumers’ health. It has been assumed that health control is
exercised optionally by the manufacturer or mandatorily by the
retailer or external controller. The author concluded that voluntary
control is suitable for low-risk conditions. Song and Zhuang (2018)
presented two centralized and decentralized models for the milk
supply chain, including a manufacturer and the government. In the
decentralized model, the power of the government is higher than
the manufacturer’s, and the Stackelberg game has been used. In
order to maximize profits, the government determines the amount
of penalty for the manufacturer, and the manufacturer determines
the amount of additive. Song and Zhuang (2017) presented three
models for the milk supply chain, including the government, a
producer, and a supplier. The centralized supply chain has been
considered for the first model and the decentralized type for the
second and third models. A coalition of the producer and supplier
has been considered in the second model, in which the government
is the leader. In the third model, the government is the most
powerful level, and the producer exhibited more power than the
supplier. In the second and third models, the Stackelberg game has
been used. The addition of additives in the food supply chain and its
consequent health problems have been addressed in a few studies.
Govindan et al. (2014) addressed the problem of multilevel
location and routing with time windows for a perishable food
supply chain. They considered the minimization of GHG emissions
and costs as the environmental and economic goals, respectively.
Kirilova and Vaklieva-Bancheva (2017) adopted an optimization
approach for green design of dairy products with the objective
functions of minimizing GHG emissions, minimizing water loss,
and maximizing profits. They solved the problem by converting the
two environmental objective functions into the cost function.
Musavi and Bozorgi-Amiri (2017) investigated the hub location and
routing problem for the sustainable food supply chain. A multi-
objective model has been considered for the problem of perish-
able products, and a metaheuristic algorithm has been presented
for solving it. The minimization of cost and CO2 emission and the
maximization of responsiveness constitute objective functions of
the problem. Rohmer et al. (2019) designed a network model for a
sustainable food supply chain. They considered economic and
environmental objective functions for a multi-objective model and
used the ε-constraint method to solve the problem. Different
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
environmental goals such as climate change and land use have been
considered as different scenarios for the case study, and the results
have been compared with each other. Only a few papers have
considered three dimensions for the sustainable food supply chain,
which are discussed below.
Chen et al. (2014) proposed two centralized and decentralized
structures for quality control at different levels of the milk supply
chain. The supply chain consists of one supplier and one retailer,
where each of the members determines the quality level aiming at
profit maximization. In the decentralized structure, the retailer has
more power than the supplier, and the Stackelberg game has been
used for modeling. Tabrizi et al. (2018) presented a bi-level model
for the competitive warm-water fish supply chain. The competition
between fish suppliers and sales centers has been considered, and
the Stackelberg game has been used. It has been assumed that the
fish suppliers are more potent than the sales centers, and they are,
therefore, the leader in the Stackelberg game. The optimal amount
of supply and inventory is determined based on the Nash-Cournot
equilibrium, using which the fish stock is then optimized. Zhu et al.
(2018) studied the competition between a supplier and a manu-
facturer for the greenness degree of the products in a food supply
chain. Centralized and decentralized structures have been consid-
ered for the supply chain, and a cost-sharing mechanism has been
used for collaboration between two supply chain members. Yu and
Cruz (2019) considered a network model for the competition be-
tween firms in an oligopolistic industry. They investigated different
environmental policies and products, maximizing profit goals.
Different tax policies such as flat emission tax rate and progressive
emission taxes have been considered for the problem, and varia-
tional inequalities have been presented for solving the model. In
these papers, the competition between supply chain members is
based on the quality, price, and degree of greenness. However,
competition based on health, price, and environmental issues in
non-contractual cooperation has never been investigated.
Some of the researchers have investigated competition and
cooperation in the green supply chain, closed-loop supply chain,
and sustainable supply chain. Zu-Jun et al. (2016) considered a
three-tiered closed-loop supply chain consisting of one manufac-
turer, one retailer, and two recyclers to study the effects of different
collaborative strategies. Four coalitions have been examined for the
specification of the best one for supply chain members. Aydin et al.
(2016) designed a closed-loop supply chain considering the
competition between the manufacturer, retailer, and remanufac-
turer. The Stackelberg game has been used for the consideration of
the competition between the supply chain members, among which
the manufacturer is the most potent. Zhang et al. (2015) developed
centralized and decentralized structures for a supply chain of goods
with a controllable rate of decline involving a manufacturer and a
retailer. The retailer invests in the manufacturer protection tech-
nology to prevent his/her products from deterioration. The
revenue-sharing contract has been considered for the cooperation
between the manufacturer and the retailer.
Madani and Rasti-Barzoki (2017) presented a new model in
which a green supply chain and a non-green supply chain compete
on the basis of price and greenness degree. The government is the
leader, and the two supply chains are the followers. The centralized
and decentralized models have also been considered for the
problem. Ji et al. (2017) studied the reduction of carbon emissions
in a two-channel supply chain involving a manufacturer and a
retailer. The Stackelberg game has been considered, in which the
manufacturer is the leader, and the retailer or a dual-channel
deliver products. Zhu and He (2017) studied the green product
design problem in a supply chain involving a manufacturer and a
retailer using a game-theoretic approach. The centralized and
decentralized structures have been considered for the model. The
3
Journal of Cleaner Production 285 (2021) 124872
competition in the decentralized model is based on the greenness
and price of the product. Mahmoudi and Rasti-Barzoki (2018) have
presented two population evolutionary game theory approach for
considering competition between green supply chain members
under government intervention. Three scenarios have been
considered to investigate impact of government policies on the
decisions of supply chain members. In the first scenario, the gov-
ernment seeks to maximize its profits by setting tariffs and sub-
sidies and consider the upper bound for environmental impacts.
The goal of the government in the second scenario is to minimize
the environmental impact by considering a lower bound for supply
chain profits. In the third scenario, government seeks to balance
between environmental and economic goals by considering an
objective function. Xu et al. (2018) have studied the impact of
consumer preference and government regulation on the decisions
on and coordination of dual-channel supply chain members.
Centralized and decentralized structures are considered for the
supply chain, including a manufacturer and a retailer. Supply chain
members compete with each other to maximize profits in the
decentralized model, in which the manufacturer is the leader of the
Stackelberg game. A new revenue-sharing contract is designed to
coordinate supply chain members and improve their performance.
Sun et al. (2019) have examined various green investment strate-
gies for the supply chain, including a population of suppliers and
manufacturers. An evolutionary game theory model is proposed for
considering the competition between supply chain members under
government intervention. The assumptions include the possibility
of participation in the green supply chain and its absence for sup-
pliers along with green production and non-green production for
producers, and their impacts on the optimal decisions of supply
chain members are compared. Giri et al. (2019) have studied the
competition and cooperation, government policies, and environ-
mental impacts of products in a supply chain including two man-
ufactures and one retailer. A bi-level model is presented for the
problem, where the government is at the top level, and supply
chain members are at the bottom level. The two manufacturers
compete to maximize their profits, and the Nash game is used to
model the competition. Competition and cooperation is assumed to
be there between retailers and manufacturers, and the Stackelberg
game is used to model the competition. Two scenarios are
considered for the government’s objectives: minimization of
pollution and maximization of profit. Xu et al. (2019) have studied
the role of the government in a supply chain including one pro-
ducer and one retailer. Four different subsidy policies are consid-
ered, and their impacts on pricing decisions and carbon offsets are
investigated in the paper. The Stackelberg game is used to model
the relationship between the government and supply chain mem-
bers to maximize supply chain profit and social welfare, where the
government is the leader of the supply chain, and the manufacturer
is the leader among supply chain members. The four government
strategies are defined in terms of the inclusion of supply chain
members in government subsidies. Bian and Zhao (2020) compared
the effects of the tax and subsidy policy in the achievement of
supply chain members’ goals. The proposed supply chain involves
three levels, including a manufacturer, the government, and several
retailers. The manufacturer determines the wholesale price and the
pollution abatement level to maximize profit, and the retailers
compete with each other to maximize their profit by determining
the order quantity. Sarkar and Bhadouriya (2020) investigated
three structures for a two-level supply chain that included one
retailer and several manufacturers. The centralized structure has
been considered for the first model, and the decentralized structure
has been assumed for the second and third models. The manufac-
turers determine the green and non-green quality, and the retailer
determines the retail price. The retailer is the leader, and the
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
Stackelberg game has been used for the second and third models.
The manufacturers compete according to the Nash game in the
second model and make a coalition in the third one.
Xie (2016) studied competition and cooperation in a decen-
tralized supply chain with two suppliers and one manufacturer. In
this paper, different strategies for supply chain members have been
considered and compared in terms of sustainability. Moreover, the
energy efficiency, consumer income, and profitability of organiza-
tions have been considered as environmental, social, and economic
dimensions, respectively. Li and Li (2016) investigated three
structures for the competition between two supply chains (each
including one producer and one supplier) intending to maximize
profits. In the first structure, both supply chains have been
considered decentralized. First, the two suppliers set the wholesale
product price in a Nash competition, and then, the manufacturers
determine the degree of sustainability with respect to the whole-
sale price. In the second structure, both supply chains are central-
ized, and the purpose of each chain is to determine the degree of
sustainability. In the third structure, one supply chain is centralized,
and the other is decentralized. The supplier determines first the
wholesale price in the decentralized chain and then the degree of
sustainability in both chains. Hafezalkotob (2017) investigated the
competition and cooperation between two green supply chains.
They compete and cooperate in terms of price and energy-saving
according to government financial policies. In this paper, the
three dimensions of the sustainable supply chain, including energy-
saving, income-seeking, and social welfare policies, have been
investigated. Raj et al. (2018) considered a sustainable supply chain
that includes a supplier and a buyer to investigate the effects of five
different contracts on members’ goals. The centralized and decen-
tralized structures for the problem have been studied, in which
supply chain members’ goal is to maximize profit. As the leader in
the Stackelberg game in the decentralized model, the supplier de-
termines the contract type and green level. The buyer determines
the order quantity and corporates in social responsibility. We
conclude by reviewing the above research that the competition in
green and sustainable supply chains is a relatively new issue, and
only a few papers have considered the three aspects of sustain-
ability in the above competition. Moreover, competition between
companies at the same level and non-contractual cooperation be-
tween supply chain members have been considered in only a few
papers.
The quality of dairy products, an essential type of food product,
declines rapidly over time, and supply chain management of these
products is, therefore, more critical due to the risk of endangering
consumers’ health. Companies must identify new customer de-
mands to stay competitive in the market. The food industry, as a
primary consumer of resources and energy, is required to comply
with sustainable supply chain standards because governments and
Table 1
Research on the food supply chain.
Reference Health Sustainability
Economical Environmental
Govindan et al. (2014) * *
Chen et al. (2014) * *
Kirilova and Vaklieva-Bancheva (2017) * *
Musavi and Bozorgi-Amiri (2017) * *
Zhu et al. (2018) * *
Tabrizi et al. (2018) * *
Rohmer et al. (2019) * *
Yu and Cruz (2019) * *
Song and Zhuang (2017) * *
Song and Zhuang (2018) * *
This Paper * * * *
4
Journal of Cleaner Production 285 (2021) 124872
associations adopt different laws on these products, and customers
want sustainable products. In Table 1, articles in the field of the food
supply chain are compared. According to this table, it turns out that
the health issue in the food supply chain is a new one. In the sus-
tainable supply chain, less attention has been paid to the environ-
mental and social dimensions. GHG emissions, product green
degree, energy-saving level, and negative environmental impacts
have been considered as environmental criteria in the literature.
GHG emissions provide a criterion more tangible and better
measurable than others. GHG emissions cause climate change and
global warming, and endanger public health. Excessive use of ad-
ditives may endanger consumers’ health. As environmental and
social criteria, GHG emissions and the use of additives are related to
public health, so it is appropriate to consider the two criteria
together. Most of the researchers have used the Stackelberg game
to consider the competition. Non-contractual cooperation has been
considered in a few papers. A combination of competition, sus-
tainability, and quality (health) for the food supply chain has not
been investigated in any of these papers. In the present paper, the
food supply chain includes one manufacturer and two suppliers.
The maximization of the profits of supply chain members as an
economic dimension, consumer health as a social dimension, and
reduction of greenhouse gas released by the manufacturer as an
environmental dimension are addressed for the problem. Central-
ized and decentralized structures are considered for the supply
chain, and competition and cooperation between supply chain
members are compared. It is also assumed that the demand for
each product depends on the price, amount of additives, and
reduction of GHG emission.
The rest of the paper is organized as follows. In Section 2, the
problem definition is presented, and the demand function and the
objective functions for each member of the supply chain are
introduced. The optimal values of the decision variables for the
three proposed scenarios are presented in the next three sections.
In Section 6, the impact of supply chain structure on the sustain-
ability aspects and the impacts of the sustainability aspects on each
other are examined. Using a numerical example, a sensitivity
analysis of the parameters is presented in Section 7. The final sec-
tion provides conclusions and suggestions for future research.
2. Problem description and modeling
Additives are added to raw materials and products by supply
chain members to increase customer attractiveness and reduce
costs. The amount of nitrogen in dairy products is measured to
determine the amount of protein. Nitrogen density is higher in
melamine than in protein, and melamine costs less than protein. In
2008, Sanlu Company used melamine instead of protein to reduce
its costs and meet customer needs, which led to health problems
Competition Cooperation
Social Stackelberg Nash Contractual Non-contractual
*
* *
*
*
* *
* * *
* * *
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
for consumers. Unfortunate events due to the excessive use of ad-
ditives have increased the control of supply chain members and
consumer awareness in recent years. The government and relevant
organizations can prevent the overuse of such additives by
imposing fines and restrictions on their use. The demand for food
products is increasing every day, and the food industry is one of the
main industries involved in the increase in negative environmental
effects. People are becoming increasingly aware of environmental
issues, and companies are seeking to invest in the mitigation of the
negative effects on the environment to increase competitiveness.
The GHG emissions from all the processes in the food supply chain
provide a very tangible measure of its negative environmental ef-
fects. Climate change and global warming is one of the main con-
cerns of the public and governments, so it is more appropriate to
consider GHG emissions exposing consumers as a factor effective
on demand. As environmental and social criteria, GHG emissions
and the use of additives endanger consumers’ health, so they must
be considered simultaneously as environmental and social aspects
of a sustainable supply chain.
In this study, a supply chain for dairy products consisting of one
manufacturer and two competing suppliers is investigated. The
suppliers sell substitutable raw materials to the manufacturer, and
the manufacturer, in turn, processes the raw materials to produce
substitutable products and sells them in a common market. Two
substitutable products are produced by the manufacturer
depending on which supplier supplies the raw material. We use
subscript i ði ¼ 1; 2Þ to represent a supplier and its relevant
product and 3  i for his/her rival. In the processing of raw mate-
rials, the manufacturer adds some chemical additives such as
melamine to the products. With additives, the products look
fresher and have better appearance and flavor. However, the
addition of an excessive amount of additives would threaten the
health of the consumers. Therefore, governments set taxes on the
amounts of additives. Furthermore, the manufacturer emits GHG
through its production process and operations, which reduces
customer demand due to consumer environmental awareness
(CEA). The manufacturer aims to maximize its total profit deter-
mining its selling price, amount of additives, and carbon emission
level. Each supplier also aims to maximize his/her profit by setting
the selling price to the manufacturer. Two centralized and decen-
tralized decision-making structures are considered for the supply
chain, and the competition and cooperation between the supply
chain members are analyzed in three scenarios. In the first scenario,
a centralized supply chain is examined. In the second scenario, a
decentralized supply chain is considered in which there is a
competition between the members of the supply chain. We
consider the static game for the horizontal competition at the same
level of the chain and the dynamic game for the vertical competi-
tion at different levels. Therefore, the Nash equilibrium is used to
model the static competition between the two suppliers, and the
Stackelberg game is utilized to analyze the dynamic competition
between the manufacturer and the suppliers, in which the manu-
facturer is the leader, and the suppliers are the followers. In the
third scenario, an alliance is considered between the manufacturer
and one of the suppliers, and there is a dynamic competition be-
tween the alliance and the other supplier. The alliance has the
leader role, and the competing supplier has the follower role in the
Stackelberg game of the third scenario. A schematic representation
of the proposed scenarios is presented in Fig. 1.
The third model is presented for a comparison between
competition and cooperation among supply chain members in the
decentralized supply chain. The general notations are as follows.
We use superscript j to show scenarios, and CE, DE, and CO are
indices for the first, second, and third scenarios, respectively, in the
rest of the paper.
5
Journal of Cleaner Production 285 (2021) 124872
2.1. Indices
i: Index for products
j: Index for scenarios jεfCE; DE; COg
2.2. Parameters
ai : Market base of product i
a: Self-price sensitivity coefficient of demand
a0 : Cross-price sensitivity coefficient of demand
b : Demand sensitivity to a one-unit reduction of emission
g : Demand sensitivity to one percent of the melamine
g : Government penalty for endangering consumer health
r : Cost of one-unit reduction of GHG emission
k : Cost of emission of one unit of GHG
ci : Cost of supplying the raw material of supplier i for one unit of
product
f : Cost of using one percent melamine in one unit of milk (1 kg)
q : Cost of using one percent protein in one unit of milk (1 kg)
n : Percentage of nitrogen needed for one unit of milk (1 kg)
m : Amount of nitrogen in one percent of melamine
t: Upper bound of the percentage of melamine used in one unit
of product
o : Amount of nitrogen in one percent of protein
q : Slope for the probability of endangering consumer health
e : Amount of GHG emission through the production of one unit
of product
2.3. Decision variables
wji : Wholesale price of supplier i for raw material used in one
unit of product in scenarioj
vji : Margin profit of product i in scenario j
xj : Amount of reduction of GHG emission in scenario j
lj : Percentage of protein in one unit of product in scenario j
t j : Percentage of melamine in one unit of product in scenario j
j
pi : Price of product i in scenario j
2.4. Functions
j
di : Demand of product i in scenarioj
hj :Probability of endangering consumer health in scenario j
ZSj i : Profit of supplier i in scenario j
j
ZM : Profit of the manufacturer in scenario j
The amount of nitrogen in dairy products is measured to
determine the amount of protein. The amount of nitrogen required
per unit of product is the sum of the total amounts of nitrogen in
the melamine and protein shown in Eq. (1). The probability of
endangering consumer health increases as does the percentage of
melamine. We use Eq. (2) to demonstrate this relationship, which is
common in the relevant literature (see, for example, Song and
Zhuang, 2017, 2018).
m t j þ o lj ¼ n jεfCE; DE; COg (1)
hj ¼ q t j jεfCE; DE; COg (2)
Customer demand is affected not only by the selling price of a
Y. Manteghi, J. Arkat, A. Mahmoodi et al. Journal of Cleaner Production 285 (2021) 124872

Fig. 1. Schematic representation of the proposed scenarios.

product but also by the selling prices of products that can substitute unit of GHG emissions is k. Besides, the manufacturer can invest in
it. Furthermore, chemical additives make the product look fresher more echo-friendly technologies to reduce its GHG emissions. The
and taste better. Therefore, the amount of additives would be investment required for the reduction of GHG emissions by x for a
another term in the demand function. Moreover, customers take unit of product is rðxj Þ2 (as in Xie (2016) and Ji et al. (2017)).
into account the carbon emission of the product besides its selling Therefore, the profit function of the manufacturer could be written
price in their purchasing behavior due to CEA. Hence, the following as
demand function is considered.
2

X

j j j j
di ¼ ai  api þ a0 p3i þ bxj þ gt j
j j j
i ¼ 1; 2 jεfCE; DE; COg (3) ZM ¼ pi  wi  f t j  qlj  ghj  k e  xj di
i¼1

2
where ai represents the potential market size of product i. Since the  r xj ; jεfCE; DE; COg (6)
demand for each product is more sensitive to its own price than to
its rival’s, it is assumed that a > a0 . Furthermore, the increase in the
where the first term is the total sale/demand multiplied by profit
percentage of melamine and the decrease in GHG emissions has
margin, and the second term is the investment made in green
positive impacts on demand. This demand model is common in the
technologies.
relevant literature (see, for example, Xie (2016) and Jamali and
Rasti-Barzoki (2019)).
Supplier i in scenario j incurs a cost of ci for the raw materials
used for the production of a unit of product i, and sells it to the 3. The first scenario (the centralized model)
manufacturer at the price of wji .
Therefore, the profit of supplier i in
In a centralized supply chain, a single decision-maker aims to
scenario j is obtained using Eq. (4).
maximize the total profit of the entire supply chain, determining

 the selling price, percentage of melamine, and the reduced
j j j
ZSi ¼ wi  ci di i ¼ 1; 2 jεfCE; DE; COg (4) amounts of GHG emissions. Therefore, the optimization problem in
the first scenario could be written as follows.
The market selling price of the products provided by the
manufacturer is the sum of the price of the utilized raw material 2

X
purchased from the supplier and the profit margin intended by the max ZSCE
1
þ ZSCE
2
CE
þ ZM ¼
manufacturer, which could be shown as Eq. (5). pCE ;pCE ;t CE ;xCE
1 2 i¼1


 
2
 pCE  ci  ft CE CE
 ql  ghCE  k e  xCE dCE  r xCE
pji ¼ vji þ wji i ¼ 1; 2 jεfCE; DE; COg (5) i i

(7)
Furthermore, the cost of the protein used for the production of a
product unit is q lj . The manufacturer uses additives such as mel-
amine instead of protein to reduce costs. The cost of using mel-
Proposition 1. In the centralized model, given that ðbþððaaaa0 ÞÞkÞ < 2r,
0 2

amine to produce a product unit is f t j : It is known that the cost of

melamine is lower than the cost of protein (that is, q > f ). Other- If g < g < g, the optimal values of GHG emissions reduction, selling
wise, the manufacturer would have no incentive to use melamine. price, and melamine percentage are given by:
However, the use of melamine could endanger consumer health,
and the government penalty for endangering consumer health is t CE* ¼ 0 (8)
g hj per product unit. Moreover, the processing of the raw materials
to the final products results in GHG emissions, and the cost for one

6
Y. Manteghi, J. Arkat, A. Mahmoodi et al. Journal of Cleaner Production 285 (2021) 124872

ðb þ ða  a0 ÞkÞð  ða1 þ a2 Þo þ ða  a0 Þð2qn þ ðc1 þ c2 þ 2k e ÞoÞ

xCE* ¼
 (9)
2 ðb þ ða  a0 ÞkÞ2 þ 2ða þ a0 Þr o

U0 þ ai U1 þ a3i U2 þ ci U3 þ c3i U4
pCE*
i ¼
 ; i ¼ 1; 2
4ða þ a0 Þ ðb þ ða  a0 ÞkÞ2 þ 2ða þ a0 Þr o
otherwise, the following relations hold:
t CE* ¼ t
its profit taking into account the reaction of the other members. We
consider a Stackelberg game between the manufacturer and the
(10)
suppliers, where the manufacturer is the leader, and the suppliers
are the followers. Furthermore, there is a static game between the
suppliers. Consequently, the sequence of decisions is as follows. In
stage 1, the manufacturer determines its strategy, i.e. ðvDE DE DE
i ; t ; x Þ.
(11) In the second stage, the suppliers determine their wholesale prices
in a simultaneous game, taking into account the decision of the

ðb þ ða  a0 ÞkÞð  ða1 þ a2 þ 2t gÞo þ ða  a0 Þð2qðn  tmÞ þ oðc1 þ c2 þ 2ke þ 2tðf þ g qÞÞÞÞ

xCE* ¼

  (12)
2 ðb þ ða  a0 ÞkÞ2 þ 2ða þ a0 Þr o

manufacturer. We use the concept of backward induction to obtain

the Stackelberg-Nash equilibrium of the game. Therefore, we first
analyze the static game between the suppliers and present the
U5 þ ai U1 þ a3i U2 þ ci U3 þ c3i U4
pCE*
i ¼
 i ¼ 1; 2 Nash equilibrium of the wholesale prices as a function of the
4ða þ a0 Þ ðb þ ða  a0 ÞkÞ2 þ 2ða þ a0 Þr o manufacturer’s decision variables. Then, we present the strategy of
the manufacturer, taking into account the presented functions of
(13)
the wholesale prices.
The proof, along with the values of g, g, and U0 - U5 , is provided in
Lemma 1. For the given values of the manufacturer’s strategy, the
Appendix (1).
best response of supplier i for its wholesale price is given by
The assumption ðbþððaaaa0 ÞÞkÞ < 2r in proposition (1) is not restrictive
0 2

 2       
2a ci  vDE þ a0 2 vDE
i þ a a3i þ t g þ bx
0 DE DE þ a 2a þ 2t DE g þ a0 c
i 3i þ v3i þ 2bx
DE DE
wDE*
i ¼ i
(14)
4a2  a0 2

since the cost of investment in GHG emissions reduction is much higher The proof of Lemma 1 is presented in Appendix (2).
than the other parameter values in practice. Supply chain members
In the decentralized model, given that a2ðab2þðaa ÞkÞ0 2
Proposition 2. 3aa0 þa0 2
<
use additives to increase sales and reduce costs, while they pay the
2r ,
penalty for endangering consumer health to the government. As could
be seen from Proposition 1, there is a range for this penalty, within If g < g < g, the optimal values of GHG reduction, selling price, and
which the supply chain members prefer not to add any additives. melamine percentage are given by:
Therefore, the government can easily set the penalty for endangering
consumer health in a range g < g < g to push centralized decision-
makers not to use melamine in the production process.

4. The second scenario (the decentralized model) t DE* ¼ 0 (15)

In a decentralized supply chain, each member aims to maximize

aðb þ ða  a0 ÞkÞð  ða1 þ a2 Þo þ ða  a0 Þð2qn þ ðc1 þ c2 þ 2k eÞoÞÞ

xDE* ¼
   (16)
2 aðb þ ða  a0 ÞkÞ2  2 2a2  3aa0 þ a0 2 r o

7
Y. Manteghi, J. Arkat, A. Mahmoodi et al. Journal of Cleaner Production 285 (2021) 124872

U6 þ ai U7 þ a3i U8 þ ci U9 þ c3i U10


 

vDE* ¼
  
i ZSCO CO
þ ZM ¼ pCO
1  c1  f t
CO
 q lCO  g hCO  k e  xCO dCO
4ða þ a0 Þ aðb þ ða  a0 ÞkÞ2  2 2a2  3aa0 þ a02 r o 1



1

i ¼ 1; 2 þ pCO CO
2  w2  f t
CO
 q lCO  g hCO

 
2
(17)
 k e  xCO dCO2  r xCO
Otherwise, the following relations hold:
(21)
DE*
t ¼t (18) To obtain the equilibrium strategy of the Stackelberg game, we
use the concept of backward induction. Therefore, the best
response of supplier 2 is first provided, and the strategy of the

ðaðb þ ða  a0 ÞkÞð  ða1 þ a2 þ 2t gÞo þ ða  a0 Þð2qðn  tmÞ þ oðc1 þ c2 þ 2ke þ 2tðf þ g qÞÞÞÞÞ
xDE* ¼

    (19)
2 aðb þ ða  a0 ÞkÞ2  2 2a2  3aa0 þ a02 r o

coalition is then determined.

Lemma 2. For a given strategy of the coalition, the best response of
U11 þ ai U7 þ a3i U8 þ ci U9 þ c3i U10 the second supplier for its wholesale price is the following.
vDE*
i ¼
  
4ða þ a0 Þ aðb þ ða  a0 ÞkÞ2  2 2a2  3aa0 þ a02 r o
a2 þ a c2 þ t CO g þ a0 pCO
1  av2 þ bx
CO CO
i ¼ 1; 2 wCO* ¼ (22)
2
2a
(20)
The proof is presented in Appendix (4).
The proof, along with the values of U6 - U11 , is presented in
Proposition 3. In the coalition model, given that
Appendix (3).
ð3aþa0 Þðbþðaa0 ÞkÞ2
The assumption made in Proposition (2) is similar to that in 4aðaa0 Þ < 2r,
Proposition (1) and does not impose any additional constraints. The
¼
equilibrium points of melamine percentage for the first and second If g < g < g , the optimal values of the decision variables of the
scenarios are equal because g and g are the same in the two scenarios. coalition are given by Eqs. (23)e(26).
Interestingly, it can be concluded that the cooperation and competition
among all members of the supply chain do not have an impact on the t CO* ¼ 0 (23)
social aspect of the supply chain.

ðb þ ða  a0 ÞkÞðða  a0 Þð3a þ a0 Þqn  2a1 a m  a2 ða þ a0 Þo þ ða  a0 ÞU12 Þ

xCO* ¼
 (24)
ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o

5. The third scenario (the alliance with one of the suppliers)

In the third scenario, the manufacturer allies with one of the U13 þ a1 U14 þ a2 U15 þ c1 U16 þ c2 U17
suppliers, and competes with the other one. Without loss of gen- vCO*
2 ¼

2ða þ a0 Þ
ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o
erality, we assume that supplier 1 participates in the alliance. In
other words, there is a cooperation between the first supplier and (25)
the manufacturer and competition between this coalition and the
second supplier. The second supplier aims to maximize its profit by U13 þ a1 U18 þ a2 U19 þ c1 U20 þ c2 U21
determining the wholesale price of its raw material. The alliance pCO*
1 ¼

between the manufacturer and supplier 1 determines the price of
2ða þ a0 Þ
ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o
the first product, the profit margin of the second product, the (26)
percentage of melamine, and the amount of reduction of GHG
emissions to maximize their total profit. The total profit of the Otherwise, the following relations hold:
coalition is presented in Equation (21). The game between the
coalition and supplier 2 is a Stackelberg game, where the coalition t CO* ¼ t (27)
is the leader, and supplier 2 is the follower.

8
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
 
ðb þ ða  a0 ÞkÞ a2 ð3qðn  tmÞ þ oð2c1 þ c2 þ 3k e þ 3tðf þ g qÞÞÞ  aU22  a0 U23
xCO* ¼


ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o
U24 þ a1 U14 þ a2 U15 þ c1 U16 þ c2 U17
vCO*
2 ¼

2ða þ a0 Þ ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o
(29)
U24 þ a1 U18 þ a2 U19 þ c1 U20 þ c2 U21
pCO*
1 ¼

2ða þ a0 Þ
ð3a þ a0 Þðb þ ða  a0 ÞkÞ2 þ 8aða þ a0 Þr o
(30)
¼ bility of endangering consumer health is lower for the first and
The proof, along with the values of g, g , and U12  U24 , is presented
in Appendix (5).
Proposition 3 reveals that if the potential market size and cost of
supply of the two products are the same, the threshold of government
penalty and the equilibrium point of the percentage of melamine will
¼ of more additives and the consequent increase in demand.
be the same for all the three scenarios. However, the upper bound (g )
of government penalty in the third scenario is different from those in
the other two scenarios in the general case, so the equilibrium point of
the percentage of melamine for the third scenario is different from
those in the other scenarios for some values of government penalty. If
¼
g > g, the equilibrium point of the percentage of melamine in the third
scenario will be lower than those in the other scenarios. Therefore, the
cooperation between the manufacturer and the first supplier will have
a better result in terms of the social aspects of the sustainable supply
chain. Otherwise, the first or second scenario will be better in those
terms.
6. Mathematical analysis and implications
The sustainability aspects of a product create a competitive
advantage. However, an enterprise should provide a balance among
the different sustainability aspects due to the conflicts among
them. Furthermore, competition and collaboration between supply
chain members have different impacts on the three aspects of a
sustainable supply chain. This section is devoted to the mathe-
matical analysis of the effects of supply chain structures on the
sustainability aspects and the interrelation between these aspects.
In the first subsection, therefore, the effects of supply chain struc-
ture are examined. In the second subsection, the impact of each
sustainability aspect on the other aspects is investigated. In fact, we
consider three parameters related to three different aspects of the
sustainable supply chain to examine their impacts on the sustain-
ability aspects and goals.
6.1. Effects of the supply chain structure
In this section, we compare the effects of different supply
structures on the probability of endangering consumer health,
reduction of GHG emission, selling price, and supply chain mem-
¼ Proposition 5.
bers’ profits. As mentioned in the previous section, g in the third
scenario is different from g in the first and second scenarios. We
define Dg as
¼ a1  a2  ða þ a0 Þðc1  c2 Þ
Dg ¼ g  g ¼ (31)
ð3a þ a0 Þt q
Journal of Cleaner Production 285 (2021) 124872

  (28)
¼
If the relation a1  a2 ¼ ða þa0 Þðc1 c2 Þ holds, g ¼ g , for which
different structures have the same probability of endangering
¼
consumer health. If a1  a2 > ða þa0 Þðc1 c2 Þ holds, g > g, and the
above probability is lower for the third scenario than for the others
¼
for g < g < g. Cooperation between the manufacturer and the first
supplier is appropriate in terms of consumer health in this case, but
the use of additives is less for the third model than for the second,
and the manufacturer must reduce prices to avoid a sharp decline
¼
in demand. If a1  a2 < ða þa0 Þðc1 c2 Þ holds, g > g , and the proba-
¼
second scenarios than for the third for g < g < g. Cooperation be-
tween the manufacturer and the supplier is not appropriate in
terms of consumer health in this case, but the manufacturer can
increase the prices of its products in the third model due to the use
Proposition 4. For different scenarios, assume c1 ¼ c2 ;and a1 ¼ a2 ,
a) For the case t CE* ¼ t DE* ¼ t CO* ¼ 0, we have
1) If t1a < a1 ¼ a2 holds, then xDE* < xCO* < xCE* :
2) If t1a ¼ a1 ¼ a2 holds, then xDE* ¼ xCO* ¼ xCE* :
3) If t1a > a1 ¼ a2 holds, then xCE* < xCO* < xDE* :
b) For the case t CE* ¼ t DE* ¼ t CO* ¼ t, we have
1) If t2a < a1 ¼ a2 holds, then xDE* < xCO* < xCE* :
2) If t2a ¼ a1 ¼ a2 holds, then xDE* ¼ xCO* ¼ xCE* :
3) If t2a > a1 ¼ a2 holds, then xCE* < xCO* < xDE* :
Where. t1a ¼ ða  a0 Þðqn þ c1 þ k eÞ; and t2a ¼
t goþðaa ÞðqðntmÞþoðtf þc2 þkeþtgqÞÞ
0
o :
Proof of proposition (4) is in Appendix (6).
Proposition 4 addresses the impacts of different structures in the
reduction of GHG emissions. Product price is expected to increase in
the second model, because there is more serious competition between
supply chain members in the second model than in the others. Rising
prices lead to lower demand, and GHG emissions increase as demand
decreases. Since t1a and t2a are smaller than the potential market base
in real applications, we can conclude that the emission reduction in
the centralized model is the highest in the three scenarios. Moreover,
the reduction of GHG emissions in the third scenario is higher than that
in the second scenario. Therefore, governments and associations can
reduce environmental impacts by encouraging supply chain members
to work together. The type of product is effective in decision-making on
supply chain members’ environmental strategy. As market share de-
creases, and production cost increases, the cooperation between
supply chain members exhibits opposite effects in the first and third
models, and GHG emissions are lower in the second model than in the
other two.
In the second and third scenarios, assume c1 ¼ c2 ;
and a1 ¼ a2 ,
1) If r ¼ t1r , then pDE*
1 ¼ pCO*
1 :
2) If r > t1r , then pDE*
1 > pCO*
1 .
3) If r < t1r , then pCO*
1 > pDE*
1 .
9
Y. Manteghi, J. Arkat, A. Mahmoodi et al. Journal of Cleaner Production 285 (2021) 124872

Where. t1r ¼ ðbþðaa ÞkÞðð5 aþ2a0 Þbþaðaa0 ÞkÞ

0
: 6.2. Effects of the essential sustainability parameters
8aðaa0 Þ
Proof of proposition (5) is in Appendix (7).
In this section, we consider the effects of government penalty
Proposition 5 indicates the impact of competition and cooperation
for endangering consumer health, cost of using one percent protein
on the price of the first product. Intuitively, we expect competition
in one unit of milk, and cost of reduction of GHG emission by one
between suppliers in the second model to increase product price with
unit on the equilibrium value of the price of the first product,
respect to that in the other models. When the cost of reducing GHG
reduction of GHG emission, and supply chain members’ profits in
emissions is lower than a threshold, however, the manufacturer seeks
the three scenarios.
to utilize that strategy to increase profit, and the price of the first
product in the second scenario is lower than that in the third, because Proposition 8. We have
the price increase is not a competitive advantage in this case. If the
manufacturer can reduce the cost of GHG emissions, it will sell prod- 1) vxCE*  0; vxDE*  0; vxCO*  0:
vg vg vg
ucts at lower prices in the second scenario than in the third. The vðZSCE* þZSCE* þZM
CE*
Þ vðZSCO* þZMCO*
Þ
vZM DE*
manufacturer seeks to increase profit by raising prices in the second 2) 1
vg
2
 0; vg  0; 1
vg  0:
scenario, if product demand dependence on the reduction of GHG vp1
CE*
vp1DE*
vpCE*
3) If t3  r then vg  0; and vg  0 ; otherwise,
r 1
vg < 0;
emissions and emission costs decreases.
vpDE*
and vg1 < 0.
Proposition 6. Assume c1 ¼ c2 ; a1 ¼ a2 ,
vpCO* vpCO*
4) If tr4  r then vg1  0; otherwise, vg1 < 0:
1) ZSCE* þ ZSCE* CE*  Z DE* þ Z DE* þ Z DE* :
þ ZM S1 S2 M

Where tr3 ¼ b ðaba0 Þ þk and. tr4 ¼ ð3aþa4Þabððabþðaa0 Þa ÞkÞ:
1 2 0 0

2) ZSCE*
1
þ ZSCE*
2
CE*  Z CO* þ Z CO* þ Z CO* :
þ ZM S1 S2 M
3) ZSCO* CO*  Z DE* þ Z DE* :
þ ZM S1 M
1
Proof of propositions (6) is in Appendix (8).
Proposition 6 provides a comparison of total supply chain profit in
the different scenarios. As intuitively expected, total profit is greater in
the centralized structure than in the others, and it is economical for a
supply chain that one decision-maker decides about the entire chain.
The profit gained by the members of the supply chain participating in
the alliance is greater than their profit in the competitive mode. In the
second scenario, product prices increase, and product demand de-
creases due to competition between members of the supply chain,
resulting in lower profit. In the third scenario, where the manufacturer
and suppliers are allied, they prevent a sharp drop in demand for the
first product by reducing its price. Cooperation and alliance between
supply chain members is economically beneficial. The second supplier
can increase the demand for the second product by cooperating with
the manufacturer in investment in the reduction of GHG emission costs
and in prevention of a sharp drop in profits.
Proof of proposition (8) is presented in Appendix (10).
As the government penalty for endangering consumer health in-
creases, the manufacturer’s costs rise, as a result of which its desire to
reduce GHG emissions decreases for the three scenarios. This means
that the government reduces supply chain members’ incentives to
reduce GHG emissions by increasing the penalty. Therefore, supply
chain members must be agile in their decisions about external factors
while considering the various aspects of a sustainable supply chain. As
expected, the profits concerning the manufacturer decrease in all the
scenarios as government penalty increases. Supply chain tax is one of
the main sources of income of any government, an increase in which
reduces supply chain members’ production and profit, so the param-
eter value must be determined in order for the government to balance
economic and social goals. We have expected the price of the first
product to increase as does government penalty; however, there are
certain conditions in which this is not the case. In fact, the price of the
first product will decrease as government penalty rises, if the manu-
facturer can reduce the cost of reduction of GHG emissions, increased
by the government. We know that ð3a4þaa Þ < 1, so tr4 < tr3 . Thus, when
0

Proposition 7. In the second and third scenarios, Assume c1 ¼ c2 ;

a1 ¼ a2 , tr4 < r < tr3 as government penalty increases, the price of the first
product in the decentralized model decreases, but that in the coalition
1) If r < t2r then, ZSCO*  ZSDE* : model increases.
2 2

2) If r > t2r then, ZSDE*

2
 ZSCO*
2
. Proposition 9. We have
3) If r ¼ t2r then,ZSDE* ¼ ZSCO* :
2 2
1) vxCE*  0; vxDE*  0; vxCO*  0:
vq vq vq
ðaþa0 Þðbþðaa0 ÞkÞ2
Where. t2r ¼ 4aðaa0 Þ : vðZSCE* þZSCE* þZM
CE*
Þ vZM
DE* vðZSCO* þZM
CO*
Þ
2) 1
vq
2
 0; vq  0; 1
vq  0:
Proof of proposition (7) is in Appendix (9). vpCE* vpDE* vpCE* vpDE*
Proposition 7 reveals that the preference of supplier 2 for a supply 3) If t3  r then vq  0; vq  0 ; otherwise, vq1
r 1 1
< 0; 1
vq < 0.
chain structure depends on the value of r. This is a fascinating obser- vpCO* vpCO*
4) If tr4  r then vq1  0 ; otherwise, vq1 < 0:
vation, since we have intuitively expected the alliance between the


manufacturer and the first supplier to reduce the price of the first Where tr3 ¼ b ðaba0 Þ þk and. tr4 ¼ ð3aþa4Þabððabþðaa0 Þa ÞkÞ:
0 0

product with respect to that in the second model and the demand for
the first product to be greater than that for the second as a result. The
decrease in the demand for the second product reduces the profit of the
second supplier in the third model with respect to that in the second
model. We observe, however, that if the cost of reduction of GHG
emissions is lower than a specified threshold, the second supplier will
gain greater profit in the third scenario than in the second scenario.
The manufacturer can reduce its GHG emissions further if it reduces
the cost. The demand for the second product increases as GHG emis-
sions decrease, preventing the sharp drop in the profit gained by the
second supplier due to competition between the second supplier and
the coalition.
Proof of proposition (9) is presented in Appendix (11).
Proposition 9 reveals the effects of the cost of using protein. The
cost of using protein is part of production costs, and GHG emissions
increase for all the three scenarios as this parameter rises, because the
manufacturer has less desire to reduce GHG emissions by increasing
production costs. As expected, all the profits concerning the manu-
facturer decrease in all the three scenarios as the cost of using protein
increases. The manufacturer can increase the use of melamine to
prevent a decrease in supply chain members’ profits. However, the
increase in melamine use depends on the maximum permissible
amount of melamine used, and the government and relevant

10
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
associations influence supply chain members’ decisions. We have ex-
pected the price of the first product to increase as does the cost of using
protein. Interestingly, however, the price of the first product will
decrease as the cost of using protein increases, if the manufacturer can
reduce the cost of reducing GHG emissions. Furthermore, since
ð3aþa0 Þ
4a < 1, tr4 < tr3 . Hence, when tr4 < r < tr3 , the price of the first
product decreases in the decentralized model as the cost of using
protein rises, while it increases in the coalition model.
Proposition 10. We have
vxCE*  0; vxDE*  0; vxCO*  0:
1) vr vr vr
vðZSCE* þZSCE* þZM
CE*
Þ vZM
DE* vðZSCO* þZMCO*
Þ melamine may be harmful to consumer health, endangered with a
2) 1
vr
2
 0; vr  0; 1
vr  0:
vpCE* vpCO* vpCE*
3) If tk1  k then vr1  0; vr1  0 ; otherwise, vr1
4)
vpDE*
If tk2  k then vr1  0 ; otherwise, vr1 < 0:
vp DE*
 
Where tk1 ¼ ðaba0 Þ and. tk2 ¼ b a3ðaa2 a0
a0 Þ
Proof of proposition (10) is presented in Appendix (12).
GHG emissions increase as the cost of their reduction rises in all the
three scenarios, and the manufacturer should seek to use lower-cost
technologies. The whole supply chain profit in the first scenario,
manufacturer profit in the second, and coalition profit in the third
decrease as does the above cost. Suppliers can be effective in the
economic and environmental aspects of the supply chain by sharing
the cost of reducing GHG emissions. Supplier cost increases as
manufacturer cost is shared. Supply chain members can increase their
demand by sharing the cost of reducing GHG emissions. The increase in
demand and income can cover the rise in supplier cost, if product
demand is dependent more strictly on the reduction of GHG emissions.
We have expected the price of the first product to increase as does the
cost of reduction of GHG emissions, but if the government reduces the
above cost, that will be a decreasing function of the cost of the
reduction. Moreover, since tk1 < tk2 , for tk1 < k < tk2, an increase in the
cost of reduction of GHG emissions decreases the price of the first
product in the second scenario, while it increases the price in the third
scenario.
7. Numerical analysis of a real-world case study
In this section, a real-world case study is conducted as a nu-
merical example for investigating the application of the theoretical
results obtained from the paper in practice. The dairy product
supply chain is considered as one of the most important food in-
dustries for the problem in which additives are added by members
to raw materials and products with the aim of reducing cost and
increasing demand in the supply chain. Supply chain members are
aware of consumers’ increasing sensitivity to the negative envi-
ronmental effects of their processes, and the food supply chain is
one of the main industries in GHG emissions, so they seek to in-
crease their demand by reducing GHG emissions. One of the pur-
poses of the present paper is to examine the impact of supply chain
structure and competition and cooperation between supply chain
Table 2
The model parameters.
Parameters
k .0007
q 106.3
ci 1.2
f 0.7
q 0.84
t 0.0001
Journal of Cleaner Production 285 (2021) 124872
members on their goals and decisions. The effects of the different
scenarios on all the variables and objective functions concerning
supply chain members are investigated in Section 7.1.
The numerical example has been taken from Song and Zhuang
(2018). It is common in quality control to measure the percentage
of protein in a dairy product. The average rate of protein required
for a dairy product is 18%. The density of nitrogen in protein is o ¼
16%, so the total amount of nitrogen required for 1 kg of a dairy
product is n ¼ :02888. The nitrogen density of melamine is m ¼
:666, higher than that of protein. The cost of using protein is q ¼
:84RMB=kg, which Sanlu Company reduced in 2008 by using
melamine, the cost of using which is f ¼ :7RMB=kg. Excessive use of
probability as defined according to Eq. (2), which is linearly
vpCO*
< 0; 1
vr < 0. dependent on the percentage of melamine in 1 kg of the product.
q ¼ 106:3 is estimated using data from Song and Zhuang (2018).
The maximum permitted amount of melamine used by supply
chain members is t ¼ 0:0001, and the government prevents over-
use of such substances by imposing fines: g ¼ 1500. The amount of
carbon dioxide emitted from the production of a dairy product is
e ¼ 1214dm
3
(FAO, 2010). The cost of carbon dioxide emissions is k ¼
kg
4
710 RMB (Gillingham and Stock, 2018), and the manufacturer seeks
dm3 CO2
to reduce the amount of carbon dioxide produced by the products
to increase demand. The other parameters of the problem are
estimated according to expert opinions, as presented in Table (2)
along with their values. The upper limits for the second and third
¼
scenarios are equal, i.e.g ¼ g , because supply cost and product
share are the same for the two products. The lower and upper
limits, i.e. g ¼ 235; g ¼ 16278, are calculated for the three models,
and government penalty for endangering consumer health is g ¼
1500, so the optimal percentage of melamine is zero.
Another purpose of this paper is to investigate the effect of the
parameters concerning each aspect of the sustainable supply chain
on the other aspects. Supply cost and market share are the same for
the two products addressed in Section 7.1. We study the simulta-
neous effects of parameters ci (cost of supplying the raw material of
supplier i for one unit of product) and ai (market base of product i)
on the variables and objective functions by considering different
scenarios in Section 7.2. The optimal value of melamine changes as
g(government penalty for endangering consumer health) changes,
and the decisions concerning other aspects of the sustainable
supply chain also change as melamine percentage changes.
Therefore, g has been selected for its impact on supply chain de-
cisions and objectives to be examined in Section 7.3. Mathematical
analysis is not possible for some of the important parameters
introduced in Section 6, so we investigate the effects of a (self-price
sensitivity coefficient of demand), k (cost of emission of one unit of
GHG), and b (demand sensitivity to a one-unit reduction of emis-
sions) in Sections 7.4e7.6. We alter the values of the examined
parameters while keeping those of the other parameters constant
to investigate their effects in Sections 7.3e7.6.
g 1500 b 25
e 1214 g 100,000,000
ai 350,000 n 0.0288
o 0.16 m 0.666
a 7000 r 1.3
a0 3000
11
Y. Manteghi, J. Arkat, A. Mahmoodi et al. Journal of Cleaner Production 285 (2021) 124872

Table 3
Results of the three proposed models.

x p1 p2 Zs1 Zs2 Zm Zco Zs1 þ Zs2 þ Zm

Centralized 984.04 47.58 47.58 15720702

Decentralized 608.49 62.81 62.81 1854975 1854975 9721024 13430974
Cooperation 833.24 47.16 60.18 1185545 13322488 14508033

Table 4
Reduction of GHG emission and price of both products for 5 cases. 3Þ c1 ¼ 1:2; c2 ¼ 1:2; a1 ¼ 350000; a2 ¼ 350000:

xCE xDE xCO pCE pDE pCO pCE pDE pCO

1 1 1 2 2 2
4Þ c1 ¼ 1:2; c2 ¼ 1:1; a1 ¼ 300000; a2 ¼ 400000:
Case 1 984.62 608.85 814.25 45.03 58.82 44.56 50.08 66.78 64.38
Case 2 984.62 608.85 854.98 50.03 66.76 49.76 45.08 58.84 55.96
Case 3 984.04 608.49 833.92 47.58 62.81 47.16 47.58 62.81 60.18 5Þ c1 ¼ 1:2; c2 ¼ 1:1; a1 ¼ 400000; a2 ¼ 300000:
Case 4 984.62 608.85 813.84 45.08 58.84 44.61 50.03 66.76 64.36
Case 5 984.62 608.85 854.57 50.08 66.78 49.72 45.03 58.82 55.94 According to Table (5), there is more demand for products with
larger market shares and lower raw material supply costs. The
demand for the first and second products is highest in the second
and fourth cases, respectively. It is clear from Table (4) that the
7.1. Comparison of the scenarios
manufacturer can increase its price as demand rises, but there is a
greater increase in price for a product with a higher supply cost.
The optimal values of the variables and supply chain members’
There are not huge differences between the reduction of GHG
profit are obtained and presented in Table (3). The greatest reduc-
emissions in the first and second models for any of the five cases.
tion of GHG emissions is exhibited in the first scenario, and the
However, GHG emissions are lowest in the third scenario when the
value is greater in the third scenario than in the second. The gov-
share of the first product is greater than that of the second, because
ernment can encourage supply chain members to cooperate by
coalition revenue is higher in this case, where greater investments
adopting different policies for reduction of GHG emissions. The
can be made for reduction of GHG emissions. Total supply chain
competition between supply chain members has increased product
profit is highest in the first and second models for the product with
prices as expected, and the prices of both products in the second
a larger market share and a lower supply cost. For the third model,
scenario are the highest among those in the three. The price of the
the profit of the whole supply chain is higher when the first product
second product is higher in the third scenario than in the first
has a larger share of the market, and supply cost is the second
because of the competition between the second supplier and the
priority. Thus, cooperation between the manufacturer and supplier
coalition, but the price of the first product is lower in the third
is more beneficial economically and environmentally when the
scenario than in the first. The coalition profit in the third scenario is
products have larger shares in the market.
greater than the sum of the manufacturer’s and first supplier’s
profits in the second scenario. The total supply chain profit in the
centralized model is the greatest among those in the three sce- 7.3. Effect of government penalty for endangering consumer health
narios, and that in the third scenario is greater than that in the
second. The second supplier’s profit is lower in the third scenario In this section, we examine the effect of g on the variables and
than in the second. Cooperation between supply chain members is profit of the supply chain. The lower bound of the parameter is g ¼
economical for cooperative members and not beneficial for others,
235 for the three models, as mentioned before. The optimal value of
so all supply chain members cooperate with others for economic
melamine percentage is tc* ¼ td* ¼ tco
* ¼ :0001, when g is lower than
and environmental purposes.
g. Figs. (2a)e(2d) show that when g < g , the demand for the
products decreases as g increases due to the rise in costs, and the
7.2. Effect of supply cost and market share of products
manufacturer raises its prices to compensate for the rising costs,
thereby preventing a sharp drop in supply chain profit. When the
In this section, five cases, as presented below, are considered for
value of the parameter exceeds 235, the optimal percentage of
investigation of the impacts of the supply cost parameters and
melamine is zero, with the demand decreasing more rapidly, and
product market share parameters on the variables and total profit
the manufacturer reduces the prices of the products to avoid a
of the supply chain.
consequent sharp drop in demand. Production cost increases as the
1Þ c1 ¼ 1:1; c2 ¼ 1:2; a1 ¼ 300000; a2 ¼ 400000: parameter rises, and the manufacturer has less desire to reduce
GHG emissions as a result, according to Fig. (2e). As observed, the
government affects GHG emissions by imposing fines on endan-
2Þ c1 ¼ 1:1; c2 ¼ 1:2; a1 ¼ 400000; a2 ¼ 300000:
gering consumers’ health, so the amount of fines should be deter-
mined so as to prevent an increase in GHG emissions by considering

Table 5
Demand of both products and total supply chain profit for 5 cases.

dCE
1 dDE
1 dCO
1 dCE
2 dDE
2 dCO
2 ZTCE ZTDE ZTCO

Case 1 159,638 103,827 201,581 209,138 124,209 103,386 15,861,648 13,526,843 14,299,753
Case 2 209,638 124,415 241,553 159,138 103,621 78,669 15,866,648 13,530,113 14,962,304
Case 3 184,280 113,951 221,238 184,280 113,951 91,097.8 15,720,702 13,446,731 14,508,033
Case 4 159,138 103,621 201,181 209,638 124,415 103,633 15,866,648 13,530,113 14,297,276
Case 5 209,138 124,209 241,154 159,638 103,827 78,916.2 15,861,648 13,526,843 14,951,612

12
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
consumer health. The profit of the whole supply chain decreases in
all the three models as the parameter increases, according to
Fig. (2f). When the parameter value is less than the lower bound,
the decrease in profit is due to the increase in costs. The reason for
the decrease in supply chain profit for other parameter values is the
simultaneous decrease in price and demand due to the non-use of
melamine. It is also observed that the product pricing strategy
adopted by the manufacturer is different for different amounts of
fines, so supply chain members’ agility and quick reaction to gov-
ernment decisions in the field of consumer health plays a vital role
in the economic aspect.
Fig. 2. Effects of g on a) price of the first product, b) the price of the second product, and c) demand of first product d) demand of second product e) reduction of GHG emission f)
supply chain profit.
13
Journal of Cleaner Production 285 (2021) 124872
7.4. Effects of the self-price sensitivity coefficient of demand
This section involves an investigation of the effects of a on the
reduction of GHG emissions, prices of the products, demand for the
products, and total supply chain profit for the three scenarios. It can
be seen from Fig. (3e) that GHG emissions increase in the three
scenarios as a rises. We can conclude that the manufacturer has less
motivation to reduce GHG emissions as demand depends more on
price. According to Figs (3a)e(3d), the manufacturer seeks to
reduce the product prices by increasing a to prevent a sharp drop in
demand and supply chain members’ profits. The prices of the
products are higher in the second scenario than in the others, and
we observe a decrease in the price difference between the first and
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
Fig. 3. Effects of a on a) price of first product, b) the price of the second product, and c) demand of first product d) demand of second product e) reduction of GHG emission f) supply
chain profit.
third scenarios with the increase in the parameter. It can be
concluded that the competition between supply chain members
over price decreases as the parameter increases. Supply chain profit
decreases as a increases according to Fig. (3f). The supply chain
profit gap between the second and third scenarios decreases with
the increase in the parameter, so the alliance between supply chain
members has less impact on the economic purposes of the supply
chain when demand depends more on the product prices.
7.5. Effects of the cost of one unit of GHG emission
The effects of k on the variables and supply chain profit are
studied here for the three scenarios. According to Fig. (4e), the
14
Journal of Cleaner Production 285 (2021) 124872
manufacturer reduces GHG emissions by increasing the cost of one
unit of GHG emission. Figs. (4a)e(4d) show that the demand for the
products has risen with the reduction of GHG emissions, so that the
manufacturer can increase the prices of its products. The profit of
the supply chain decreases as the cost of one unit of GHG emission
increases according to (4f), which indicates that the rise in revenue
due to rising prices and demand for products is lower than the costs
concerning emissions. Supply chain members should consider
economic purposes besides environmental ones in specification of
their emission reduction strategy. Supply chain members’ income
taxes provide one of the main sources of revenue for governments,
so they should consider environmental and economic purposes in
specification of the cost of emissions.
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
Fig. 4. Effects of k on a) price of the first product, b) the price of the second product, and c) demand of first product d) demand of second product e) reduction of GHG emission f)
supply chain profit.
7.6. Effect of demand sensitivity to a one-unit reduction of emission
In this section, we examine the impact of b as an important
environmental parameter. According to Fig. (5e), the manufacturer
reduces GHG emissions by increasing the parameter value, and the
emissions decrease more rapidly in the first and third scenarios
than in the second. Therefore, alliance and cooperation between
supply chain members is environmentally more beneficial when
product demand is dependent more strictly on the reduction of
GHG emissions. Figs. (5a)e(5d) show that product demand in-
creases as GHG emissions decrease, and the manufacturer can raise
the product prices. Supply chain members’ competitiveness on
prices increases as b rises, so the price difference between the
15
Journal of Cleaner Production 285 (2021) 124872
second and third scenarios for the second product decreases, and
that between the first and third scenarios for the first product in-
creases. As shown in Fig. (5f), the profit of the supply chain in-
creases with the rise in b. Profit increase rate is higher in the first
and third scenarios than in the second, so cooperation and alliance
between supply chain members is economically beneficial when
product demand is more strictly dependent on environmental
issues.
8. Conclusions and directions for future research
Only a few papers have investigated the effects of additives on
consumer health and the social and environmental dimensions of
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
Fig. 5. Effects of b on a) price of first product, b) the price of the second product, and c) demand of first product d) demand of second product e) reduction of GHG emission f) supply
chain profit.
the appropriate food supply chain. We considered consumer health
and reduction of GHG as the social and environmental dimensions
of the sustainable food supply chain, respectively, along with the
economic goal of the stakeholders. Three scenarios were presented
for the food supply chain, including two suppliers and one manu-
facturer. The centralized structure has been considered for the first
scenario, and the decentralized structure has been assumed for the
second and third scenarios. In the second scenario, the competition
between the two suppliers has been modeled using the Nash game,
and the competition between the suppliers and the manufacturer
has been modeled using the Stackelberg game. In the third sce-
nario, a coalition was considered between the first supplier and the
16
Journal of Cleaner Production 285 (2021) 124872
manufacturer. The coalition power was higher than that for the
second supplier, and the Stackelberg game has been used for
modeling. The combination of health, sustainability, and competi-
tion in the food supply chain was considered for the first time in
this study.
We obtained intervals for the government penalty for endan-
gering consumer health in the three scenarios, based on which the
government can prevent the use of additives. The mathematical
analysis demonstrated that the reduction of GHG emissions is more
in the third scenario than in the second. The total supply chain
profit is highest in the first scenario, and the total profit of the first
supplier and manufacturer is more in the third scenario than in the
Y. Manteghi, J. Arkat, A. Mahmoodi et al.
second. The amount of reduction of GHG emissions, the total profit
in the first scenario, the manufacturer’s profit in the second sce-
nario, and the coalition’s profit in the third scenario decreased as
the government penalty for endangering consumer health, cost of
using protein, and cost of reduction of GHG emission increase. A
number of impressive results were obtained, as follows. 1) The price
of the first product in the second scenario will be more than that in
the third scenario if the cost of reduction of GHG emission is more
than a threshold. 2) The second supplier’s profit in the third sce-
nario will be more than that in the second scenario if the manu-
facturer can reduce the cost of reduction of GHG emission. 3) If the
manufacturer can reduce the cost of reduction of GHG emission,
and the government increases the cost of GHG emission, the price
of the first product will decrease as government penalty and the
cost of using protein increases. 4) If the government decreases the
cost of GHG emissions, the price of the first product will decrease as
the cost of reduction of GHG emissions increases.
Based on the numerical results, cooperation between the
manufacturer and supplier is more beneficial economically and
environmentally when the market share of the first product is
larger than that of the second. GHG emissions increase as the
government penalty for endangering consumer health rises,
because the production costs increase with the rise in the param-
eter. We have found that the manufacturer has less motivation to
reduce GHG emissions when customer demand depends more
strictly on price. The alliance between supply chain members has
less impact on the economic purposes of the supply chain when
demand depends more strictly on the product prices. The profit of
the supply chain decreases as the cost of one unit of GHG emission
increases, because the cost of reducing each unit of GHG emission is
higher than the revenue rises due to increased demand and prices.
Alliance and cooperation between supply chain members is envi-
ronmentally more beneficial when product demand is more strictly
dependent on reduction of GHG emissions. The rate of profit in-
crease with a rise in b is higher in the first and third scenarios than
in the second, so cooperation and alliance between supply chain
members is economically beneficial when product demand is more
strictly dependent on environmental issues.
Governments and associations consider some restrictions
against the use of additives and emissions. Future work can solve
this problem using the bi-level optimization method. In addition to
setting penalties, the government may consider ways to limit the
use of additives and reduce GHG emissions, which could be
addressed in another study.
CRediT authorship contribution statement
Yashar Manteghi: Conceptualization, Methodology, Software,
Validation, Writing - original draft. Jamal Arkat: Conceptualization,
Validation, Writing - review & editing, Project administration.
Anwar Mahmoodi: Methodology, Writing - review & editing, Su-
pervision. Hamid Farvaresh: Methodology, Writing - review &
editing, Supervision.
Declaration of competing interest
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
Appendix ASupplementary data
Supplementary data to this article can be found online at
https://doi.org/10.1016/j.jclepro.2020.124872.
17
Journal of Cleaner Production 285 (2021) 124872
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