Decision-Making Models and Coordination in a Closed-Loop Supply Chain Considering Patent Protection for DfR

Abstract

With improvement in consumers’ environmental awareness and the level of design for remanufacturing (DfR), the traditional supply chain is gradually changing into a closed-loop supply chain (CLSC). However, a high level of remanufacturing design will increase design costs for manufacturers, while also reducing the cost for remanufacturers. Moreover, manufacturers usually use patent barriers to restrict the development of remanufacturers. The main aims of this study were to explore how manufacturers and remanufacturers can benefit each other, taking into account patent protection and carbon emissions. Firstly, we adopted game theory to establish four decision-making models of the manufacturer and remanufacturer regarding DfR. Secondly, we designed a cost-sharing contract for DfR based on the decentralized decision-making model to coordinate a CLSC. The results of this study showed that under the patent-protected market environment, DfR increased the manufacturer’s profit but did not necessarily promote the remanufacturer’s profit growth. A cost-sharing contract can effectively achieve improvements in the presence of DfR, increase profits for both parties, and improve the economic and environmental benefits of the CLSC.