A coordination model for closed-loop supply chain systems with a single manufacturer and retailer

Abstract

This paper develops a coordination model for a closed-loop supply chain (CLSC) system consisting of a single manufacturer and retailer where market demand depends on the green technology level, retailer’s selling price, and promotional efforts. The manufacturer manufactures products from raw materials to finished products and adapts them for sale to meet key market demands. Used products from consumers will be returned to the retailer to be processed by remanufacturing under a technology license, and the rest will be returned to the manufacturer for remanufacturing, refurbishing, recycling, or waste disposal. The models are formulated mathematically and constructed under three scenarios – centralized, decentralized, and a Stackelberg game led by the manufacturer. Numerical examples are given to illustrate the results of the developed model. The result suggests that both types of investment can assist the closed-loop supply chain in enhancing its financial and environmental performance. It also suggests that lowering emissions levels through green technology might increase product selling prices, hence increasing sales volume.