Decision-making in a retailer-led closed-loop supply chain involving a third-party logistics provider

Abstract

<p style='text-indent:20px;'>This paper investigates decisions in a three-echelon closed-loop supply chain composed of one manufacturer, one retailer, and one third-party logistics provider (3PL), with the retailer being dominant. Inspired by game theory, we develop an equilibrium model for a retailer-led, closed-loop supply chain under logistics outsourcing. We derive the optimal forward and reverse logistics decisions of each supply chain member. This article analyzes the effects of market size, consumers' sensitivity to sales prices, the proportion of logistics costs, consumers' environmental awareness, and consumers' sensitivity to recycling prices on decision-making process. Finally, we provide a numerical example to verify the validity of our conclusions. Our results indicate that the higher the manufacturer's share in the forward logistics cost, the higher the sales price, the wholesale price, and the forward logistics service price, and the lower the order quantity. The higher the manufacturer's share in the reverse logistics costs, the lower the recycling price, the transfer price, and the recycling amount, and the higher the reverse logistics service price. Whether it is forward logistics or not, the higher the manufacturer's share in the logistics costs, the lower the profits of each member.</p>