Impact of quality regulation policy on performance of a remanufacturing supply chain with non-waste returns

Abstract

Quality issues in a remanufacturing supply chain with non-waste returns have been reported many times. To address these issues, the government proposes different quality regulation policies. This paper develops a multi-agent simulation model to study how the quality regulation policy affects the performance of a remanufacturing supply chain with non-waste returns. Here, the main performance includes profit and hazard ratio of products. Our results indicate that self-regulation of the market cannot realize a desirable outcome (low hazard ratio and high manufacturer’s profit). Adjusting quality regulation probability is more efficient than adjusting the penalty for inferior products. From the view of increasing manufacturer’s average profit, or improving the government’s efficiency, the best policy is the solely adjusting supervision probability policy. From the view of reducing hazard ratio, the best policy is adjusting supervision probability- penalty policy. The appropriate penalty for inferior products can realize the desirable outcome. With an increasing supervision probability, the hazard ratio decreases, and the manufacturer’s average profit increases because the remanufacturing cost and penalty for inferior products decrease.