An Evolutionary Game Model in Closed-Loop Supply Chain

Abstract

An evolutionary game model is investigated to study the stability conditions for four different reverse channel structures in the closed-loop supply chain. The proper channel structures are analyzed for the given conditions. We consider one centrally coordinated model and three decentralized models that consist of manufacturer collection, retailer collection, and third-party collection model. The profit function is maximized for the centralized model and Stackelberg equilibriums are obtained for the other three decentralized models. Using the optimal profit functions, an evolutionary game model is proposed. On the basis of the stable conditions, we propose a profit sharing allocation method that can make the centralized supply chain model stable from a long-term view. Also, several numerical experiments are conducted. The results show that the coordinated channel structure is preferable over other structures with a proper profit sharing allocation method.