Abstract
The importance of remanufacturing has been recognized in research and practice. The integrated system, combining the forward and reverse activities of supply chains, is called closed-loop supply chain (CLSC) system. By coordination in the CLSC system, players will get economic improvement. This paper studies different coordination performances of two types of contracts, two-part tariff (TTC) and reverse revenue sharing contract (RRSC), in a closed-loop system. Through mathematical analysis based on Stackelberg Game Theory, we find that it is easy for manufacturer to improve more profits and retailer’s collection effects by adjusting the ratio of transfer collection price through RRSC, and we also give the function to calculate the best ratio of transfer collection price, which may be a valuable reference for the decision maker in practice. Besides, our results also suggest that although the profits of the coordinated CLSC system are always higher than the contradictory scenario, the RRSC is more favorable to the manufacturer than to the retailer, as results show that the manufacturer will share more profits from the system through RRSC. Therefore, RRSC has attracted the manufacturers more to closing the supply chain for economic consideration.
Highlights
In recent years, developed countries have attached importance to the collection of used resources and products
Through mathematical analysis based on Stackelberg Game Theory, we find that it is easy for manufacturer to improve more profits and retailer’s collection effects by adjusting the ratio of transfer collection price through reverse revenue sharing contract (RRSC), and we give the function to calculate the best ratio of transfer collection price, which may be a valuable reference for the decision maker in practice
We want to know if RRSC has much better coordination performance than Tariff Contract (TTC) by calculating the total profit of the whole closed-loop supply chain (CLSC) system
Summary
In recent years, developed countries have attached importance to the collection of used resources and products. Guide Jr. and Van Wassenhove [3] defined the CLSC as a system, which combines design, control, and operation activities to maximize value creation over the entire life cycle of a product with dynamic recovery of value from different types and volumes of returns. Aydin et al [6] suggested that CLSC involves a collection of used products from customers and supports various product recovery strategies, such as remanufacturing, recycling and reuse, and managing the relationship and coordinating with supply chain partners, such as manufacturers, suppliers, retailers, and/or remanufacturers. Researchers have always been investigating CLSC system management These studies mainly consist of three aspects of CLSC, including the investigation of the reverse logistics, price and return policy and coordination mechanism. We perform a numerical study and draw the conclusions
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