Pricing decisions through O2O commerce in a closed-loop green supply network and logistics under return and cooperative advertising policies

Abstract

Our current societal practices of excessive consumption and disposal pose a significant threat to the environment, necessitating the implementation of appropriate policies and strategies to mitigate these destructive factors. Recycling used products can play a crucial role in preserving the environment. In this study, we propose a closed-loop green supply network (CLGSN) that consists of a manufacturer and a retailer who produce and sell green products through both offline and online channels. The Stackelberg approach is employed, with the manufacturer serving as the leader and the retailer as the follower. A revenue sharing policy is established between these members. To encourage customers to return their used products, we introduce four return policies under four scenarios for both offline and online channels. These policies are designed to drive customer engagement with sustainable practices while also promoting revenue growth for all network members. The present study investigates various return policies through dual channels, with the aim of identifying the most effective approach. The first scenario considers a Return & Loyalty Refund policy for offline channels, while a Return & Discount approach is evaluated for online channels. The second policy defines the Return & Loyalty Refund and Return & Loyalty Discount policies for offline and online channels, respectively. In the third scenario, a Return & Partial Refund policy is examined for offline channels, while a Return & Discount policy is studied for online channels. Finally, the fourth scenario explores a Return & Partial Refund policy in an offline channel and a Return & Loyalty Discount policy in an online channel. By comparing these different policies, this research aims to identify the optimal approach for managing returns across multiple channels. Overall, this research aims to provide insights into the effectiveness of different return policies in both offline and online channels, while also considering environmental sustainability. Ultimately, this research will help us improve customer satisfaction, increase profitability, and reduce waste. In fact, in this study we find that: (1) under the fourth scenario, the total profit chain has the highest value; (2) due to the practical return policies, more customers are convinced to return their used products and hence, more used products will be recycled and then remanufactured. So, as the results show, it improves the total profit chain; (3) the proposed return policies can both conserve the environment and coordinate the total profit chain. a numerical analysis is implemented to represent the relations clearly. We also evaluate how different parameters affect decision variables and profit chains by providing an analytical sensitivity.