Collective Recycling Responsibility in Closed-Loop Fashion Supply Chains with a Third Party: Financial Sharing or Physical Sharing?

Jiajia Nie,Yuan Shi,Zongsheng Huang,Yingxue Zhao

doi:10.1155/2013/176130

Abstract

We develop three closed-loop supply chain models where manufacturers can utilize financial or physical support to push a third party to collect the used fashion product for remanufacturing. We first examine two strategies for the collective recycling responsibility (CRR), namely, the financial sharing (FS) and the physical sharing (PS), using the model with no CRR as a benchmark. After that, we conduct a detailed comparison among the three models in terms of the retail price, demand, return rate, and the profits received by the supply chain members. With this study, we find the following. (i) The FS or PS support offered by the manufacturer to the third party will result in a lower retail price and a higher demand. (ii) The optimal return rate with PS scheme is always higher than that without the CRR, and the one with FS scheme is at least as high as that without the CRR. (iii) All the members in the closed-loop supply chain can always benefit from the CRR. In addition, (iv) which scheme of the FS, PS, or no CRR is the best for the supply chain members will depend heavily on the transfer price of the used product.

Highlights

Product remanufacturing plays an important role on lowcarbon economy and sustainable development of supply chains
We conduct a detailed comparison among the three models in terms of the retail price, demand, return rate, and the profits received by the supply chain members
We find the following. (i) The financial sharing (FS) or physical sharing (PS) support offered by the manufacturer to the third party will result in a lower retail price and a higher demand. (ii) The optimal return rate with PS scheme is always higher than that without the collective recycling responsibility (CRR), and the one with FS scheme is at least as high as that without the CRR. (iii) All the members in the closedloop supply chain can always benefit from the CRR

Summary

Introduction

Product remanufacturing plays an important role on lowcarbon economy and sustainable development of supply chains. 27 countries in Europe have enacted take-back legislation for the used products, 23 states in the United States have passed similar product take-back laws, and Japan has enacted recycling laws for home appliances and computers (Atasu and Souza [1]) With these legislations, almost all the manufacturers are physically or financially responsible for their used products and have built reverse channels to reclaim these products for remanufacturing, such as HP, Lenovo, Apple, Xerox Corporation, and the “big three” auto manufacturers in the United States (Wu [2]). Most of the previous research, such as Savaskan et al [3] and Savaskan and Van Wassenhove [4], assume that only one member in the closed-loop supply chain, for example, a retailer or a manufacturer or a third party, bears the responsibility of recycling used products. Which scheme of the FS, PS, and no CRR is the best for the supply chain members will depend heavily on the transfer price of the used product

Literature Review

Model Description

Three Collecting Models in Closed-Loop Supply Chains

Comparisons of the Models

Conclusion