Green supply chain management under capital constraint

To determine how carbon emissions reduction affects supply chain operations and financing decisions, this paper examines a green supply chain, which consists of one manufacturer (playing the leading role) and one capital-constrained retailer; in this supply chain, bank financing and trade credit financing are viable. This research explores the retailer's optimal order quantity, the manufacturer's optimal wholesale price, the optimal level of carbon emissions (for both bank financing and trade credit financing), and the design of the contract to coordinate the supply chain. We find that the supply chain achieves a win-win outcome in terms of production quantity and emissions reduction when the manufacturer invests in emissions reduction. In addition, we find that a supply chain with a contract outperforms a non-contract supply chain in production quantity and emissions reduction. Furthermore, the effect is more remarkable when trade credit financing is viable.