Contract Design for Return Products in a Cooperative Closed-Loop Supply Chain

Abstract

The importance of considering the End-of-life product (EOL) in the closed-loop supply chain network has led it to model a two-echelon closed-loop supply chain network between the retailer and the manufacturer in this article, considering the redemption guarantee. Consumer products to be paid. Therefore, the model is considered in two modes, in which initially the members of the supply chain under a Stakelberg game are competing with each other for pricing on new products, product redemption and wholesale prices. In this (decentralized) scenario, members of the supply chain (retailer and manufacturer) are a percentage increase in their profit function. In this scenario, the producer, after determining the wholesale price as the leader of the game, maximizes the profit from the sale of its products, and then the retailer, as the leader in the game, determines the price of the products and the redemption price. In another (centralized) scenario, the main goal is to increase the profitability of the entire supply chain. This article also examines a contract related to the rate of purchase of returned products and the sale of new products, which encourages supply chain members to work together to increase their profits over a decentralized scenario. The stated materials lead to the design of models in a focused and decentralized scenario. The results of implementing the model on the sample problem show the high efficiency of this type of contract in increasing the profit of supply chain members compared to the decentralized scenario.