Abstract
Closed-loop supply chain (CLSC) management faces collection and remanufacturing cost disruption challenges. This study explores a CLSC system wherein original equipment manufacturers (OEMs) license the third-party remanufacturer (TPR) to bear the remanufacturing activities and investigate pricing decisions in the CLSC, while considering collection and remanufacturing cost disruptions. To obtain the optimal pricing strategy, we develop game theory models under the disruptions of both centralized and decentralized CLSCs. Based on theoretical and numerical analyses, we obtain the following results: (1) Whether or not disruption events occur, the centralized supply chain can better encourage consumers to participate in the collection of used products than a decentralized supply chain; (2) when collection disruption in a large positive region or the remanufacturing cost disruption in a large negative region occurs, OEM and TPR profits will greatly increase, and the OEM will raise the licensing fee to extract more profit from the remanufacturing activity; (3) a certain robust region exists for the retail price and wholesale price when the supply chain faces disruption increase; (4) when the supply chain faces the disruptions, it has great influence on the OEM’s licensing fee but little on the TPR’s acquisition price. The main contributions of the study include: (1) We considered the impacts of both technology licensing and collection and remanufacturing cost disruption; (2) we developed game theory models to determine the optimal manufacturing and remanufacturing quantities, and pricing strategy under the disruptions; (3) based on theoretical and numerical analyses, we presented some interesting and important insights. The results of this paper could provide useful guidelines for supply chain members on how to effectively control costs to obtain more profit by adjusting prices and selecting a better operation mode for the closed-loop supply chain.
Highlights
This study examines the impacts of both collection and remanufacturing cost disruptions on the pricing decisions in a Closed-loop supply chain (CLSC), where the original equipment manufacturers (OEMs) licenses a third-party remanufacturer (TPR) for remanufacturing
Our work explores the optimal pricing decisions in a CLSC with technology licensing under both collection and remanufacturing cost disruptions
In a decentralized CLSC, it is considered that the OEM, who acts as the channel leader, first determines the optimal wholesale price and technology licensing fee to maximize their own profits and the retailer and the TPR decide the retail price and acquisition, respectively
Summary
To adopt sustainable manufacturing practices and take social responsibility, OEMs can entrust a third-party remanufacturer to recycle and remanufacture by means of technology licensing [4]. The CLSC faces high uncertainty risk because of a series of factors such as the unpredicted availability of recycling products, consumer awareness of environmental protection, and product characteristics This uncertainty can cause disruptions in the collection and remanufacturing processes. Caterpillar, one of the world’s largest remanufacturers, relies on mature technology and entrusts agent manufacturers in different regions to conduct remanufacturing activities all over the world They suspended the operation of some plants in the regions affected by COVID-19 due to a shortage of parts in 2020. We consider the impacts of both technology licensing and collection and remanufacturing cost disruption, and develop game theory models to determine the optimal manufacturing and remanufacturing quantities, and optimal pricing strategy under the disruptions.
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