# Sustainability and coordination in a socially responsible supply chain using a combined incentive contract and a social marketing strategy

**Authors:** Mahdi Ebrahimzadeh-Afrouzi, Masoud Asadpour Ahmadchali  
**arXiv:** [2301.06618](https://arxiv.org/abs/2301.06618)  
**Date:** 2023-01-16  
**Summary page:** https://www.summarizepaper.com/en/paper/2301.06618v1/

## Key points

- Importance of social sustainability in supply chains and its impact on market share
- Development of a coordination scheme for a manufacturer-retailer supply chain that contributes to social donation activities under a cause-related marketing campaign
- Manufacturer's participation in cause-related marketing campaign through donating a proportion of the retail price to a cause
- Communication of manufacturer's involvement in the campaign through labeling and highlighting
- Factors influencing market demand: retail price, retailer's stock level, and donation size
- Exploration of three decision-making systems: decentralized, centralized, and coordinated
- Decentralized system focuses on individual profit optimization without considering other members' profitability
- Centralized system considers entire supply chain perspective for optimal retail price and replenishment decisions
- Incentive mechanism based on cost and revenue-sharing (RCS) factor developed to ensure coordination without profit loss among supply chain members
- Proposed model evaluated through numerical investigations and blocked decision-making scenarios related to social donation activity
- Coordination model increases profits for all supply chain members, promotes social responsibility, and gains market share for manufacturers investing in social sustainability initiatives
- Investing in social sustainability helps supply chains gain market share while contributing to socially responsible practices
- Coordination scheme offers insights into optimizing decision-making processes and fostering collaboration among supply chain members for sustainable development.

## Summary

The study focuses on the importance of social sustainability in supply chains and its impact on market share in today's competitive business environment. The researchers aim to develop a coordination scheme for a manufacturer-retailer supply chain that contributes to social donation activities under a cause-related marketing campaign. The manufacturer participates in a cause-related marketing campaign by donating a proportion of the retail price to a cause whenever a consumer makes a purchase. This information is communicated to consumers through activities like labeling, highlighting the manufacturer's involvement in the campaign. The market demand is influenced by factors such as the retail price, retailer's stock level, and donation size. The researchers explore three decision-making systems: decentralized, centralized, and coordinated. In the decentralized system, each member of the supply chain aims to optimize their profits without considering the profitability of other members. The centralized system considers the entire supply chain perspective to determine optimal values for retail price and replenishment decisions. To ensure coordination among supply chain members without any profit loss, an incentive mechanism based on cost and revenue-sharing (RCS) factor is developed. This mechanism encourages members to accept optimal results from the centralized system while also dividing surplus profit obtained between members based on their bargaining power. The proposed model is evaluated through numerical investigations and blocked decision-making scenarios related to social donation activity. The findings indicate that this coordination model not only increases profits for all supply chain members but also promotes social responsibility within the supply chain as well as gaining market share for manufacturers who invest in social sustainability initiatives. Overall, this study highlights how investing in social sustainability can help supply chains gain market share while also contributing to socially responsible practices. The coordination scheme presented offers insights into optimizing decision-making processes and fostering collaboration among supply chain members for sustainable development.