Reducing carbon emissions, including emission abatement outsourcing at the supply-chain level, is becoming a significant but challenging problem in practice. Confronting this challenge, we therefore break down the practice to focus on a low-carbon supply chain consisting of one supplier, one manufacturer and one third-party emission-reducing contractor. The contractor offers a carbon reduction service to the manufacturer. In view of the increasing proportion of Greenhouse Gases (GHG) emissions and absence of carbon reduction policies in developing countries, we adopt the prospect of consumers’ low-carbon preferences to capture the demand sensitivity on carbon emission. By exploiting the Mean-Variance (MV) model, we develop a supply chain game model considering risk aversion. Comparing the supply chain performances of the cases under risk neutrality and risk aversion, we investigate the impact of the risk aversion of the supplier and the manufacturer on the low-carbon supply chain performances, respectively. We show that the risk aversion of chain members will not influence the relationship underlain by the profit-sharing contract between the manufacturer and contractor, whereas they may extend the supplier’s concerning range. Although the manufacturer’s risk aversion has a positive impact on the wholesale price, interestingly, the supplier’s impact on the wholesale price is negative. Furthermore, we propose a contract to coordinate the risk-averse low-carbon supply chain by tuning the aversion levels of the supplier and the manufacturer, respectively. Through numerical study, we draw on managerial insights for industrial practitioners to adopt a low carbon strategy potentially by managing the risk attitudes along the supply chain channel.

Information concerning carbon reduction efficiency is of great significance to supply chain operations. Considering the impact of information asymmetry on the performance of low-carbon supply chain, we therefore analyze a chain system with a single product designer and a single manufacturer. The manufacturer owns information on carbon reduction efficiency, whereas the product designer only knows that the carbon reduction efficiency of the manufacturer is either high or low. To induce the manufacturer to reveal his true private information of carbon-reduction efficiency to the product designer, we devise the pooling and separating equilibrium models to compare the impacts of these two models on supply chain performance, respectively. We find that the high-efficiency manufacturer gets his first-best choice at the equilibrium decision in the separating model, and obtains the information rent in the pooling model. The information rent increases in the efficiency difference between the two emission-reduction types. Additionally, we examine how the probability of the high (or low)-efficiency manufacturer being chosen impacts on both the profits of chain members and carbon-reduction levels. The research provides a reference for companies about how to cooperate with partner who possess private information of carbon emissions.

Among responses to governmental regulations for curbing carbon emissions, outsourcing carbon reduction to a specialized third-party is an important means to satisfy a variety of carbon-emission restraints. In this situation, however, designing efficient contracts for emission reducing while retaining appropriate supply-chain profit is a substantial but challenging problem. We therefore refine this from practice and consider a low-carbon supply chain consisting of one manufacturer and one retailer to analyze in which conditions the system should outsource its carbon reduction efforts to an external expert firm under the assumption that consumers with a sense of social responsibility prefer low carbon products. In the decarbonization expert firm embedded supply chain, we examine the respective impacts of three cost-pooling schemes for emission reduction on supply chain performances. We find that the manufacturer-undertaking contract is the worst in terms of profit and carbon reduction level among the contracts being studied, while the retailer-undertaking contract yields the best outcome in terms of the profit and performs well in carbon reduction when the contractor has cost efficiency in carbon reduction, which is even better than the joint-undertaking contract in carbon reduction when the contractor is inefficient. The study shows the diversity of contracts on outsourcing carbon reduction significantly impacts the supply chain profitability, carbon reduction efficiency and sustainability of operations.

Managing material and cash flows attracts concerns of physical and financial departments in most companies. We, therefore, focus on optimizing the replenishment policy for a channel with stock-dependent demand considering item deterioration and order backlogging under two financial schemes of progressive trade credit periods. We take both the continuous payment regime (CPR) and discrete payment regime (DPR) into account in the progressive trading process, which generates ten distinct scenarios. We show that the profit functions may not necessarily be concave and accordingly give a corresponding computing algorithm, which relaxes the convexity assumptions of objective functions in the existing literature and consequently enrich the research. We address the formulation characterization and the logic of pursuing global optimization from models arising in all settings. Computational studies and simulations are conducted to illustrate the effect of various parameters on the optimal replenishing policy and profit. Numerical experiments show that the CPR scheme is dominantly prior to DPR for long replenishment time intervals, whereas it is exactly the opposite for short time intervals. We also examine the impact of the shortage cost and deteriorating rate on optimum ordering policy and channel performance. Finally, future research directions are addressed in the end.