Coordination in a closed-loop supply chain under asymmetric and symmetric information with sales effort-dependent demand

Abstract

The importance of reverse supply chain has been widely recognized in past two decades. Many companies use it in order to repair, replace, reuse and recycle their used products. On the other hand, due to independence of the decisions of the members in supply chain, the coordination mechanisms like contracts, can increase profit and improve decision making in supply chain, especially when information is asymmetric and each member has confidential information. In this paper, a three-echelon closed-loop supply chain including one manufacturer, one-third party and one retailer is developed. First, we survey Stackelberg games with sales-effort dependent demand and investigate supply chain performance under the centralized and decentralized scenarios. Next, three types of contract in supply chain including two parts tariff, cost-sharing and also revenue-cost sharing are analyzed and compared under asymmetric and symmetric information. We conclude that the supply chain can be coordinated under two parts tariff and revenue-cost sharing contracts when symmetric information exists, while supply chain coordination may not be achieved under asymmetric information. Finally, we proposed numerical examples and results show that revenue-cost sharing and two parts tariff have better performances.