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.

This paper examines the stocking quantity for a firm in the presence of prudent consumers. First, we analyze the conditions for prudent consumers to purchase products based on the estimations of perceived value bias and product availability, and then solve the firm’s optimal stocking decisions. We observe that if the firm wants to determine an optimal stocking quantity to maximize the expected profit, it must search for more information about prudent consumers’ perceived value bias, return cost, and estimates of product availability. We further compare prudent and myopic consumers and analyze how the firm’s optimal stocking quantity would change when facing these two types of consumers. This result indicates the firm facing prudent consumers should take measures (such as increasing stocking quantity or providing relevant information) to increase the perception of product availability; however, when consumers in a market are myopic, the firm should properly increase the consumers’ return cost by increasing compensation to the firm for returned products.