Pricing and used product collection strategies in a two-period closed-loop supply chain under greening level and effort dependent demand

Abstract

This article presents a two-period closed-loop green supply chain model with a single manufacturer and a single retailer to investigate the impact of green innovation, marketing effort and collection rate of used products on the supply chain decisions. The market demand of the green product is assumed to be dependent on the selling price, greening level and marketing effort. In the first period, the manufacturer produces new product from fresh raw materials while in the second period, besides manufacturing new products, he also collects and remanufactures used products. The centralized model and three decentralized models (depending on the manufacturer’s collection option of used products) are considered. A cost sharing contract is also employed to address the coordination issue. The optimal results are obtained, and the effect of key model-parameters on the optimal decisions are investigated through sensitivity analysis. It is observed that the supply chain gives better response when both the manufacturer and the retailer collect used products simultaneously, and the performance of the supply chain can be improved by instigating either green innovation or marketing effort or both.