Competitive Analysis of Collection Behavior between Retailer and Third-Party in the Reverse Channel

Abstract

In recent years, the concerns of environmental issues are growing. Reverse logistic has received considerable attention due to potential of value recovery from the used products and noted that the first activity of the reverse logistic is to collect or acquire used products from public consumers. The front behavior in all the reverse logistics is the collections of the used products and reused of products or resources. In this paper, we investigate the correlation between the payment given to customers and the return rate of used product. A two-echelon supply chain model consisting of a manufacturer, a retailer and a third-party with product remanufacturing is based on game theory framework. We formulate the proposed problem as a profit maximization problem. Furthermore, we analyze the extensive model in which the unit price of retrieving a returned product is different and the corresponding analyses are carried out to illustrate the features of our model. Finally, we probe into the influence on third-party cost for collecting and handling used products.