Decision models of closed-loop supply chain with remanufacturing under hybrid dual-channel collection

Abstract

A number of factors, including environmental legislations and increasing global uncertainties, have led many companies to consider engaging in remanufacturing. In this paper, we mainly address a topical issue of choosing the appropriate reverse channel format for collecting used products from customers. We suppose a manufacturer who has three reverse hybrid collection channel structures to choose: (1) manufacturer and retailer collecting used products at the same time, (2) manufacturer contracting the collection of used products to a retailer and a third party, and (3) manufacturer and third party collecting used products at the same time. To generate managerial insights into this important issue, we develop a structural model to explore the appropriate reverse channel structure for the manufacturer. Numerical examples are presented to demonstrate the applicability of the presented model. The results show that, ceteris paribus, the manufacturer and the retailer hybrid collection channel is the most effective reverse channel structure for the manufacturer. We also find that, under the same conditions, the manufacturer and the retailer hybrid collection approach is obviously superior to the single channel collection approach. Finally, we explore the channel coordination mechanism to implement channel cooperation for the manufacturer and the retailer. Our results indicate that the strategic alliance between the manufacturer and the retailer can effectively achieve the desired channel coordination. Furthermore, the Nash bargaining model is utilized to implement profit sharing for the manufacturer and the retailer in the channel coordination of strategic alliance.