Optimal decisions of price, quality, effort level and return policy in a three-level closed-loop supply chain based on different game theory approaches

Abstract

Over the last few decades, the closed loop supply chain (CLSC) has been examined because of concerns over the environment and social liability. In this paper, we propose a joint optimisation model of pricing strategies, quality levels, effort decisions, and return policies by considering the reference price effect in a three-level supply chain under different channel power structures. To investigate the impact of different scenarios on optimal decisions and performance of a CLSC, we address five different channel power structures: centralised, vertical Nash, manufacturer Stackelberg, retailer Stackelberg, and third party Stackelberg. We present a numerical example to demonstrate the theoretical results of the developed model, and we also compare the optimal decisions to determine the best channel power structures considered. Then, to examine the impact of the key parameters on the model's behaviour, we conduct a sensitivity analysis on the main parameters, and finally, we provide a conclusion. [Received 5 October 2016; Revised 9 March 2017; Accepted 24 March 2017]