Product pricing and recycling mode considering competition under used product error classification

Abstract

Sorting used products is an effective way for enterprises to improve resource utilization and increase profits, but the effects of sorting quality standards and classification errors on the sorting process requires attention. In light of the fact that in addition to recycling used products by themselves, enterprises may choose to outsource or compete with third parties for recycling, by constructing the game-theoretic model of manufacturer sorting, third-party recycler sorting and competitive sorting, this paper studies the impact of quality sorting standards and two types of classification errors on the decision-making and performance of supply chains under different modes. The results show that although a higher the quality sorting standard indicates a higher the acquisition price, and a lower the sales price of the product, for enterprises, a higher the quality sorting standard is not the better. Classification errors have opposite impacts on the profits of different recycling channels. Enterprises can optimize their performance by controlling error proportions in combination with their own sorting modes. Moreover, although the manufacturer sorting mode is superior to the third-party sorting mode, a third-party recycler participating in the recycling competition will not harm the manufacturer’s profits, and it can also make the recycler stricter in the sorting process, reduce the classification error proportions, and optimize the manufacturer’s profits and supply chain performance. These findings provide corresponding insights for enterprises in determining quality sorting standards and selecting sorting modes.