Creating a Sustainable Closed-Loop Supply Chain: An Incentive-Based Contract with Third-Party E-Waste Collector

Abstract

This paper proposes a closed-loop supply chain model to study the impact of product returns and awareness program on e-waste supply chain. The study focuses on the sustainability aspects of e-waste management and the effects such initiatives bring about to the environment at large. Reusing and recycling of collected products in manufacturing will improve the supply of scarce resources and reduce reliance on virgin raw materials. Engaging in CLSC can enhance brand reputation and competitiveness through sustainability while reducing the health risks to informal recycling workers by formalizing practices. The proposed model consists of a manufacturer, retailer, and third-party collector (TPC) under wholesale price and incentive contracts with deterministic demand. From the analysis it is observed that integrating a third-party collector with higher recycling rate boosts the total profit of the decentralized setting with a TPC. The centralized model, with a single decision maker, results in lower retail prices and higher collection rates compared to the decentralized models thereby commanding a higher overall profit.