Pricing, refund, and coordination optimization in a two stages supply chain of green and non-green products under hybrid production mode

In this research, a joint pricing and refund optimization problem under cooperative and non-cooperative strategies in a two-stage supply chain consists of a supplier and a manufacturer who produces two types of product; green and non-green is developed. The features of both products in usage and functional are same but in price and environmentally aspect are different. Moreover refund policy is considered for both products that can affect on customers’ decision. We explore and analyze the system performance under both non-cooperative and cooperative strategies. The Stackelberg game in cooperative and Rubinstein bargaining in non-cooperative environments are applied respectively. Results show the cooperation of members increase their profits and products demand for both types of products. By increasing the value of potential demand, refund amount of green product and profits in cooperative and non-cooperative cases are increased and refund amount of non-green product is decreased. Changes of utility level sensitivity to the refund amount of green and non-green products have direct relations with refund amount and system profits, unless the utility level sensitivity to the refund amount of non-green product has contrariwise relationship with the refund amount of non-green products. © 2017, Springer Science+Business Media Dordrecht.