Recycling channel selection and coordination in dual sales channel closed-loop supply chains

Abstract

The implications of dual sales channels (direct and traditional retail channels) and closed-loop supply chains (CLSCs) have been well recognized in the literature and in practice. In this study, we explore the reverse channel choice for the manufacturer and the design of coordination mechanisms in CLSCs in the midst of dual competitive sales channels. We consider three recycling channel structures: manufacturer collecting (Model M), retailer collecting (Model R) and third-party collecting (Model C) structures. We present the following findings. The manufacturer and the retailer obtain more profits in Model M and Model R, respectively. However, from the perspective of the supply chain system, either the M model or the R model could be optimal depending on the following parameters: channel competition intensity between the direct and retail channels, collection costs and remanufacturing cost savings. Furthermore, we show that a simple price contract that consists of the wholesale price, direct channel price and transfer price of the used product (in Model R and Model C), with a complementary profit sharing mechanism can effectively coordinate dual-channel CLSCs under different recycling channel structures.