Abstract
Reuse of products has become increasingly critical to reduce manufacturing costs and revitalize the new product market. With two different investment perspectives, manufacturers cooperate with retailers and recyclers to collect products from customers. By investing in the retailer, manufacturers gain an opportunity to sell new products, whereas by investing in the recycler, manufacturers can reduce production costs through remanufacturing. Therefore, manufacturers must determine the appropriate investment strategies to be applied to the two channels by analyzing the trade-offs between these opportunities. For this purpose, we discuss three investment strategies: Revenue-Sharing Investment, Direct Subsidy per Unit Returned Cartridge, and Hybrid Investment. The system dynamics model is used to construct scenarios of various investment strategies used by the manufacturer with the collection partners and analyze the corresponding changes in the revenues of the manufacturer. The results indicate that the application of the revenue-sharing strategy and the hybrid strategy to support retailers and recyclers is effective in increasing manufacturer profit. More specifically, by considering the hybrid investment strategy of revenue-sharing investment and the direct subsidy per unit returned cartridge for the recycler, the manufacturer can simultaneously avoid excess investment by the recycler and promote return activities through the recycler.
Highlights
Closed-loop supply chains (CLSCs) focus on collecting used products from customers and reusing them to generate value. is loop consists of a traditional forward supply chain (FSC), in which products are sold via retailers, and a reverse supply chain (RSC), in which used products are returned via reverse channels [1]
Partners in the supply chain, such as retailers and manufacturers, can acquire an opportunity to sell new products to the customers who participate in the return activity. ird, for auxiliary and consumable products that depend on another device, such as ink cartridges for a printer, the manufacturer can encourage customers to buy new products rather than refurbish or refill the used ones when the RSC is employed
We discuss which investment strategy the manufacturer should consider for the two channels based on the trade-offs between the opportunity to sell new products by investing in the retailer and the reduction in production costs created by investing in the recycler
Summary
Closed-loop supply chains (CLSCs) focus on collecting used products from customers and reusing them to generate value. is loop consists of a traditional forward supply chain (FSC), in which products are sold via retailers, and a reverse supply chain (RSC), in which used products are returned via reverse channels [1]. En, the manufacturer uses the returned products in a remanufacturing process, and the finished products are distributed through forward supply chain channels Such activities reduce the requirements for raw materials associated with traditional production processes and lower manufacturing costs. Mafakheri and Nasiri [10] introduced a typical leader-follower (Stackelberg) strategic decision-making game problem observed between manufacturers and retailers In this problem, retailers determine the appropriate level of return incentives for customers based on the expected revenue shared by the manufacturer. Savaskan and Van Wassenhove [5] studied an RSC structure in which retailers compete; in this model, manufacturers directly collecting used products and indirectly collecting them through retailers were observed, and the impact of each method on wholesale and retail prices as well as the used products’ return rate was analyzed. Where the retailer collects used products from its customers who directly visit the retailer, the rewards for the collection offered by the retailer to its customers, as well as the distance between the customers and the retailer, can be critical factors determining whether the customers will return the used products. e customers’ tendency to favor cost savings by reuse can affect collection activities. is study reflects the rewards for returning products provided to customers by the collection partner and customer willingness, including their tendencies and their distance to the collector
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