Analysis of the impact of demand uncertainty on retailer's dominance in coordinating closed loop supply chain with production remanufacturing

Abstract

In this paper, we investigate a two-echelon supply chain with a manufacturer and a retailer, where the retailer takes in charge of new products distribution and waste products recovery. We first develop retailer-dominant non-cooperative game model by introducing a sensitivity of retailer's order quantity to manufacturer's wholesale price, then we analyze the cooperative scenarios, in which the Nash bargaining model is used to implement profit sharing between the manufacturer and the retailer. Theoretical and numerical analyses show that the retailer's dominance over the manufacturer increases with the increase in the sensitivity of retailer's order quantity to manufacturer's wholesale price under the retailer-market demand uncertainty, and the recovery rate is also another important factor that influence the ordering and pricing decisions as well as the expected profits of each supply chain participant and the entire supply chain. Numerical analyses also show that the retailers dominance decreases with the increase in retail-market demand uncertainty.