How does a responsible supplier control its production under the opportunity of demand expansion?

Abstract

Increasing supply chain players seek to run business in a responsible way. This work stands from a supplier`s point of view by considering a two-stage supply chain structure in which a responsible supplier produces a responsible component (or raw material, ingredient) through an entrepreneurial process and exploits the business opportunity (e.g., market expansion) to sell it to downstream buyers. Buyers` market is classified by two: one for price-sensitive and one for responsible-conscious. We develop quantitative models to analyze a supplier`s production structure, interplaying with the magnitude to this business opportunity exploitation.