Dynamic Models and Coordination Analysis of Reverse Supply Chain with Remanufacturing

Abstract

In this paper, we establish a reverse chain system with one manufacturer and one retailer under demand uncertainties. Distinguishing between the recycling process of the retailer and the remanufacturing process of the manufacturer, we formulate a two-stage dynamic model for reverse supply chain based on remanufacturing. Using buyback contract as coordination mechanism and applying dynamic programming the optimal decision problems for each stage are analyzed. It concluded that the reverse supply chain system could be coordinated under the given condition. Finally, we carry out numerical calculations to analyze the expected profits for the manufacturer and the retailer under different recovery rates and recovery prices and the outcomes validate the theoretical analyses.