Quality, buyback and technology licensing considerations in a two-period manufacturing–remanufacturing system: a closed-loop and sustainable supply chain

Abstract

Technology licensing affects both welfare and financial concepts. In the literature, while the effects of different licensing mechanisms on the decision variables of a manufacturing system are thoroughly investigated, relationships between licensing scenarios and production quantities on a closed-loop supply chain (CLSC) have not been examined completely. To fill out this gap we study three most common types of licensing mechanisms; fixed-fee, royalty cost and two-part tariff licensing scenarios with the quality level of collected second-hand items in a two-period CLSC. The proposed model consists of one manufacturer and one remanufacturer who is permitted to engage in the remanufacturing process just in the second period of the planning horizon. Our main assumption is that a constant demand is to be satisfied within a two-period CLSC. Consumer demand is satisfied in the first period by manufacturing the raw materials and in the second period, both manufacturing and remanufacturing processes are possible due to the demand quantities and quality level of the collected second-hand items. A numerical example and sensitivity analysis are presented along with analytical conclusions to provide insights into the performance of the CLSC parties in each licensing scenario. The findings prove the applicability of the proposed model.