Research on green closed-loop supply chain with the consideration of double subsidy in e-commerce environment

Abstract

Issues such as shortage of resources, degradation of environment, enhancement of consumers’ environmental awareness and their preference for green products, continuous improvement of environmental protection laws and regulations of government, together with increasing competition among enterprises, make the construction of green supply chain, such as production, recycling and remanufacturing of environment-friendly products particularly important. However, there are still many constraints for enterprises to effectively implement green supply chain management, such as lack of research and development (R&D) funds and technical capacity. Moreover, government is also eager to know how to formulate effective financial subsidy policies to encourage manufacturers to actively build green supply chain. In the context of above issues, the maximum total profit model of green closed-loop supply chain system is constructed under the consideration of online and offline sales modes and consumers’ green preference in this paper. Considering excessive computational time required when solving this non-linear optimization task with mixed continuous/integer variables via traditional optimization methods, meta-heuristic approaches, Genetic Algorithm (GA) and Particle Swarm Optimization (PSO) are adopted to try to find and compare calculating example’s approximate optimal solution. The calculating results indicated that enterprises could arrange the ratio of manufacturing and remanufacturing lots properly to achieve system optimal outcome; and government could adopt a suitable subsidy policy to encourage recycling and remanufacturing of used products. Sensitivity analysis of green degree of the recycled products proved that government could adopt the second subsidy strategy for low-green products to further promote the recycling and remanufacturing of enterprises. This research provides theoretical foundation for initiating reasonable government subsidy policy, formulating practical production and operation plan of enterprises as well as maximizing profits in E-commerce environment.