Centralized model of dual channel closed loop supply chain under price discount contract and remanufacturing process by a third party

Abstract

A series of activities covering the process of production, distribution, logistics and marketing to consumers, either directly or indirectly, and the return of products that have been used by consumers to producers are called Dual Channel Closed-Loop Supply Chain (DC CLSC). In this study, the DC CLSC model was developed in the centralized scenario by considering the discount price contract consisting of one manufacturer, one retailer, and one collector as a third party. The model developed is in the form of a multivariable function without constraints with three decision variables, namely the price from the retailer, the price from the manufacturer in online media, and the recovery rate of used products. Furthermore, the optimal solution is determined with the three decision variables. In addition, wholesale prices are determined from the manufacturer to the retailer and a fee paid to collectors for used products that have been remanufactured based on a price contract between the manufacturer, retailer and wholesaler. Based on the optimal solution obtained and the sensitivity analysis, it is concluded that the discount price contract provides more benefits for retailers and collectors without harming manufacturers.