Cooperative game for coordination of a green closed-loop supply chain

Abstract

This research examines a single-stage green closed-loop supply chain (GCLSC) in which the green manufacturer, retailer, and collector try to reform the environmental effects of their operations, products, and services across the value chain according to their environmental responsibilities. The collector is responsible for performing the take-back program of used green products, recycling, and trading second-hand products. In this paper, the environmental responsibility of all three supply chain members is considered. The demand function of eco-friendly products is defined as a function of retail price, environmental efforts of the green manufacturer and retailer, the sensitivity of environmentally conscious consumers to their efforts, and the worth of off voucher given to the consumer for returning used product. For coordinating this GCLSC, first, the mathematical model of the decentralized model and all possible coalition forms are examined. Then, the cooperative game theory , including Nucleolus solution mechanism (NSM) and Shapley value mechanism (SVM), and different contracting structures, including cost-sharing (CS), revenue sharing (RS), and two-part tariff (TPT) contract, are utilized. Major goal of this research is to compare these two classes of coordination models in terms of economic and environmental dimensions to choose the best strategy for channel coordination. Eventually, computational and practical investigations reveal that forming the grand coalition yields better results than contracts in terms of achieving environmental goals and total profit. Also, the economic advantages are different for each coordination model. Besides coordination mechanisms explored in this research, as a future study, one can incorporate the effect of competition between green and traditional manufacturers on supply chain performance. Finally, managerial insights of this research guide the managers towards desirable practices to promote coordination and achieve a fair allocation of profit. • Develops a green closed-loop supply chain (GCLSC) including green manufacturer, retailer, and collector. • Obtains the optimal pricing, environmental responsibilities, and rate of return decisions. • The environmental responsibility of all three supply chain members is considered. • Grand coalition yields better results than contracts in terms of achieving environmental goals and total profit. • The economic advantages are different for each coordination model.