Abstract
Business organizations all around the globe are looking to expand circular models into their supply chains to harness economic and environmental benefits. Moreover, the act of giving incentives to retailers by the manufacturer is also quite prevalent in the present business environment. These incentives are offered to promote the sales of products of a manufacturer. Therefore, this paper examines the optimal decisions for a dual-retailer closed-loop supply chain (CLSC) in which the manufacturer bestows the credit period to the one retailer (a firm that possesses shallow market penetration and has a higher insistence on the usage of the capital venture), and cash discount to the next retailer (a firm that occupies the market to a greater extent and receives lower thrust on the usage of invested capital) under a non-coordinated system and coordinated systems. This study proposes the mathematical model to determine the optimal decisions of the manufacturer in terms of credit period and cash discount and also compute the optimal decisions of the retailers for their retail prices and order quantities to maximize individual’s profit in the CLSC. Moreover, numerical analysis and sensitivity analysis is performed to get insights into the optimal decisions of the manufacturer and retailers. The results of sensitivity analysis show that credit period and cash discount increases with the rise in price elasticity, and decreases with an increase in cross-price elasticity. The findings also confirm that members of dual-retailer CLSC under coordination and manufacture’s incentive scenario generate higher environmental and economic benefits required to attain sustainability in production and consumption.
Highlights
The concept of circular economy (CE) has gained popularity among manufacturing industries due to its untapped environmental and economic benefits
An examination that looks at the effect of producer’s incentives in terms of cash discount and credit period on the competing retailers in the closed-loop supply chain (CLSC) is absent in the existing literature
The development of circular business models will help in attaining the objectives of industrial ecology [70]
Summary
The concept of circular economy (CE) has gained popularity among manufacturing industries due to its untapped environmental and economic benefits. For example, promotion, warranty, government incentives, different types of discounts, rebates, and so forth impact the decisions of supply chain members in the competitive business condition It is prevalent in the present business scenario to provide incentives to retailers by the manufacturers as a sales promotion tool [11]. Researchers have put constant efforts into understanding the decisions of SC members under the condition of cash discount and credit period in various supply chain models. An examination that looks at the effect of producer’s incentives in terms of cash discount and credit period on the competing retailers in the CLSC is absent in the existing literature. (1) How do the retailers and a manufacturer in CLSC take decisions individually to optimize their profits under the condition of cash discount and credit period. The authors have illustrated the environmental and economic benefits of centralized decision making
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