Reverse supply chain coordination by revenue sharing contract: A case for the personal computers industry

Abstract

Products that are not recycled at the end of their life increasingly damage the environment. In a collection – remanufacturing scheme, these end-of-life products can generate new profits. Designed on the personal computers industry, this study defines an analytical model used to explore the implications of recycling on the reverse supply chain from an efficiency perspective for all participants in the process. The cases considered for analysis are the two- and three-echelon supply chains, where we first look at the decentralized reverse setting followed by the coordinated setting through implementation of revenue sharing contract. We define customer willingness to return obsolete units as a function of the discount offered by the retailer in exchange for recycling devices with a remanufacturing value. The results show that performance measures and total supply chain profits improve through coordination with revenue sharing contracts on both two- and three-echelon reverse supply chains.