Abstract
This paper develops a closed-loop supply chain model consisting of a single manufacturer, single retailer, and single collector under various coordination scenarios. New products produced from the manufacturing and remanufacturing processes will be sold to the market at the same price. Used products collected by the collector are sorted so that products categorized as recoverable will be sold to the manufacturer. There are two recovery processes considered in this paper, namely remanufacturing and refurbishing. Used products below the minimum acceptable quality level of the manufacturer will be categorized as waste and will be disposed of. We assume that the manufacturing process is imperfect as it produces reworkable defective products. A carbon cap-and-trade policy and investment in green technologies are applied in order to restrict the carbon emissions generated by the production stage of the system. The demand at the market place depends on the green technology level, the quality of the product, and the selling price. The proposed model is constructed under five different scenarios – centralized, decentralized, and three Stackelberg games led, respectively, by the manufacturer, retailer, and collector. A numerical example is provided to illustrate and compare the proposed model under each scenario and investigate the sensitivity of some of the model parameters on the optimal solutions. The results show that the centralized scenario performs better in maximizing the total profit compared to the decentralized one. However, the retailer-led Stackelberg model tends to give more equitable profit to all players when the selling price is set at the lower level as this will attract more demand.
Highlights
In recent decades, the increasing awareness of environmental sustainability has encouraged many companies to implement closed-loop supply chains (CLSC)
A mathematical model for a closed-loop supply chain model was developed by considering the reworking processes, waste disposal activity, and carbon emission costs, where the level of demand depends on the quality of the product and the selling price
We constructed the model under five different scenarios, which are centralized, decentralized, and three different channel leaderships with Stackelberg game theory
Summary
The increasing awareness of environmental sustainability has encouraged many companies to implement closed-loop supply chains (CLSC). Based on the description above, considerable research on CLSC has been widely discussed in the literature, none has considered carbon reduction, green technology investment, imperfect production and two recovery processes. In considering this context, we want to answer the following questions:. Carbon cap-and-trade regulation is applied to cut down the amount of emissions coming from the supply chain Some aspects, such as emission reduction efforts, two recovery processes, waste disposal, used items collection and imperfect production, are investigated. (3) We investigate a closed-loop model by making an assumption that the used products which have not passed the acceptable quality standard for remanufacturing or refurbishing are considered as waste and need to be disposed of.
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