A Study of The Effect of Demand Uncertainty for Low-Carbon Products Using a Newsvendor Model

Shaojian Qu and Yongyi Zhou
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Shaojian Qu: Business School, University of Shanghai for Science and Technology, Shanghai 200093, China
Yongyi Zhou: Business School, University of Shanghai for Science and Technology, Shanghai 200093, China

IJERPH, 2017, vol. 14, issue 11, 1-24

Abstract: This paper studies the effect of uncertain demand on a low-carbon product by using a newsvendor model. With two different kinds of market scales, we examine a game whereby a manufacturer produces and delivers a single new low-carbon product to a single retailer. The retailer observes the demand information and gives an order before the selling season. We find in the game that if the retailer shares truthful (or in contrast unreal or even does not share) forecast information with the manufacturer, the manufacturer will give a low (high) wholesale price through the sequence of events. In addition, as a policy-maker, the government posts a subsidy by selling the low-carbon product per unit. The manufacturer creates a new contract with a rebate for the retailer. We also take the consumer aversion coefficient and truth coefficient as qualitative variables into our model to study the order, pricing, and expected profit for the members of supply chain. The research shows that uncertain demand causes a the major effect on the new low-carbon product. Thereby, we suggest the retailer should share more truthful information with the manufacturer.

Keywords: low-carbon product; newsvendor model; trust coefficient; consumer aversion coefficient; demand uncertainty (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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