Abstract
This paper studies a closed-loop supply chain that covers three key members: Manufacturer, new components supplier, and recycled-components supplier. Considering the power of each member in the chain, we use game theory to analyze the optimal decision and coordination, particularly investigating the economic value of components reuse strategy. The results show that, in a decentralized setting, the value of components reuse highly depends on the attributes of the products. For the products with low price elasticity, reuse strategy is only beneficial to the recycled-components suppliers. Further investigation shows the manufacturer can use wholesale price contracts to coordinate and improve the supply chain’s performance.
Highlights
In recent years, due to the shortening of the life-cycle of a product and the acceleration of upgrading, the consumption of products in the world has increased exponentially
This section reviews the literature under two categories: The development of closed-loop supply chain network design (CLSCND), and the game theory models used in closed-loop supply chain
Govindan et al [1] developed a hybrid approach for circular supplier selection and order allocation in a multi-product circular closed-loop supply chain (C-CLSC), including fuzzy analysis network process (FANP), fuzzy decision-making trial and evaluation laboratory (FDEMATEL), and multi-objective mixed-integer linear programming (MOMILP) models
Summary
Due to the shortening of the life-cycle of a product and the acceleration of upgrading, the consumption of products in the world has increased exponentially. Compared with traditional supply chains, a closed-loop supply chain collects used-products from customers, transports returned-products using reverse logistics, and recovers added value by reusing the entire product or some of its modules, components, and parts [2] It can significantly reduce the consumption of resources and the amount of final waste, which has good environmental benefits [3,4]. The driving force at the economic level is always the key issue concerned by enterprises, and it is discussed in depth by academics in recent years [5] In this context, this paper uses game theory to design and analyze the closed-loop supply chain system composed of a new components supplier, a recycled-components supplier, and a manufacturer.
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