RISK BASED SELECTION OF CLEANER PRODUCTS IN A GREEN SUPPLY CHAIN∗

In this study, we consider the selection of cleaner products in a green supply chain, where the manufacturer and the retailer face financial risk due to the uncertainty in market demand resulting from changes in economic and business conditions. As an efficient approach to risk reduction, portfolio selection is used for cleaner product selection with minimal risk exposure, subject to particular constraints. Also, we investigate the impact of players’ power on the selection of cleaner products in two cases of supply chain structures: vertical integration and a decentralized setting. Then, a numerical example of a green supply chain on energy conservative automobile in China is presented to illustrate related issues. Finally, conclusions are drawn and some topics on future work are suggested.

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