Abstract
The pricing strategy of remanufactured products has been widely regarded as a significant issue due to the associated economic benefits for both suppliers and retailers awareness worldwide. However, the overall profit determined based on centralized pricing strategy or decentralized pricing strategy is not in line with the actual profit of the manufacturer and the retailer, especially when taking the cost of carbon emission under the system of cap and trade into account. This paper proposes a revenue sharing contract model to coordinate the optimal pricing strategies for both manufacturers and retailers who engages in remanufacturing. The model considers the different Willingness to Pay (WTP) for remanufactured products, and profit distribution of manufacturers and retailers under the Cap and Trade policy. The optimal retail and wholesale price of new products and remanufactured products are derived by solving a convex programming model. Our results identify that: (1) The carbon emission cap is negatively correlated with the retail price of both new products and remanufactured products when the established profits function of the closed-loop supply chain is set to be a constant. The retail price of remanufactured products is also negatively correlated with the value of WTP, while the retail price of new products is positively correlated with WTP. (2) The profit of retailers is positively correlated with carbon emission cap, while the relation of the manufacturer's profit and carbon limit present an inverted U shape, which indicates the optimal carbon emission limit for manufacturers achieving the maximum profit. Moreover, the profit of the retailer and manufacturer and the coefficient of WTP is positively correlated. Numerical experiments are conducted to examine the feasibility of the proposed pricing strategies and gain optimal managerial insights for carbon cap and trade policy.
Highlights
Remanufactured products have been arisen the interests from both the governmental regulation and supply chain management since reverse logistics significantly reduced residual wastes by providing customers abundant of qualified re-products in a lower cost during the recent decades
LITERATURE REVIEW This section summarizes the state of the art related to pricing decision models applied for remanufactured products, and sorts out several comparative analyses in terms of the impact of Cap and Trade police on profits of closed-loop supply chain, which are subsequently detailed in Section A and B respectively
This article established an optimal pricing model through sets the profit function of manufacturers and retailers under the Cap and trade system by considering the different willingness to pay for remanufactured products, the results clearly show the impact of carbon emission limits and customers’ willingness to pay on product prices and profits through numerical simulation
Summary
Remanufactured products have been arisen the interests from both the governmental regulation and supply chain management since reverse logistics significantly reduced residual wastes by providing customers abundant of qualified re-products in a lower cost during the recent decades. W. Gan et al.: Coordinated Revenue-Sharing-Based Pricing Decision Model for Remanufactured Products to explore the impact of Carbon Cap and Trade policy on manufacturers and retailers offering new and remanufactured products in different strategy to the pricing decision. (1) In this paper, the optimal pricing decision model is established by considering the carbon emission limit in a closed-loop supply chain. The willingness to pay for remanufactured products was not considered in pricing strategy of closed-loop supply chain, and manufacturers did not know the market demand for new and remanufactured products. The revenue-sharing contract model has been applied in various supply chains, but these studies didn’t solve the problem of the impact with consumers’ WTP on product pricing and overall profit in the closed-loop supply chain under the carbon cap and trade regulations.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
