Coordination supply chain management under flexible cleaner production system and stochastic conditions

The necessity of coordination and flexibility is essential for the success of supply chain management (SCM). This study considers a two-echelon SCM's coordination issues in a flexible production system at a smart factory. This study investigates a flexible production system as an alternative method to overcome the stock-out risk to produce complex products with high and stochastic demands for a buyer. However, higher production rates may increase the chances of system failure and imperfections. Thus, this model treats the rate of production as a decision variable. The carbon emissions in production activities have driven researchers to focus on clean productions in flexible systems for the future. The flexible production systems in smart factories considering emissions costs can help industries reduce these emissions by optimizing the production rates. The flexibility in the production systems adds up the considerable setup cost to the vendor and for this, the model considers the investment cost of technologies for setup cost reduction. Two models, the decentralized and the centralized, and solution algorithms are proposed to maintain the balance between optimal production rate and unit production cost and optimize the system cost. Besides, an optimal cost-sharing strategy is developed with the bargaining powers of SCM members. By optimizing the production rate and controlling the setup cost and lead time, the developed collaborative strategy optimizes environmental performance in terms of emissions control and economic performance with SCM optimization.