Investigating structure of a two-echelon closed-loop supply chain using social work donation as a Corporate Social Responsibility practice

Abstract Besides profit, which might be the objective of any business, firms have recently shown more interests toward demonstrating Corporate Social Responsibility (CSR). As many firms are practicing CSR, they are increasingly realizing the benefits of adopting CSR as one of their main operations. Inspired by the increasing CSR practices of business firms, this study takes a practical step in implementation of a CSR activity. It develops a socially responsible closed-loop supply chain (CLSC) model that takes into account donation, as a CSR activity, and recycling of the used products for environmental sustainability. Considering the effects of selling price and social work donation (SWD) on demand, it develops optimal closed form solutions for three decentralized and a centralized channel structures. A comparative analyses is presented to find the best socially responsible environmental friendly decentralized channel structure. Furthermore, the channel coordination problem between the manufacturer and the retailer is investigated using two part tariff contract. The numerical analysis showed that among the three decentralized models, the model in which the retailer promotes and collects the used products from customers generates the best channel performance.