Sustainable Design Operations in the Supply Chain: Non-Profit Manufacturer vs. For-Profit Manufacturer

Sustainable design aims to reduce the negative impacts either on people (e.g., create healthy) or on planet (e.g., minimize waste). In other words, sustainable design is the philosophy that tends to improve design performance by incorporating health and safety attributes (for people), and environmental attributes (for planet) into products. In this paper, we develop an analytical model to examine the sustainable design operations in a supply chain which consists of one retailer and one manufacturer. The manufacturer designs the products by investigating sustainable design efforts, such that the products can better coordinate human needs. Motivated by the real industry practice, we consider two business modes for the manufacturer: a nonprofit organization (i.e., a demand quantity seeker) or a commercial firm (i.e., a profit seeker). We obtain the optimal operational decisions in both the decentralized case and the centralized case, and we also compare the results. Managerial insights are derived, and the efficiency of the sustainable design is also discussed.