Abstract
This paper addresses the stochastic used-product return problem in a closed-loop supply chain consisting of one manufacturer and one retailer concerned with fairness. We resolve the equilibrium feedback control strategies with no fairness concern retailer, gap fairness concern retailer, and self-due fairness concern retailer. We find only under a specific condition, the feedback Markov equilibrium exists, and the expected return rate would approach to the stable state, regardless of the fairness type the retailer is. The equilibrium prices are decreasing over the return rate, and the equilibrium collecting control strategy is increasing over the return rate. The increasing of stochastic disturbance intensity can be beneficial to the supply chain members. The manufacturer should shift profit to the retailer since the retailer is fairness concern. By the comparison analysis, we find the gap fairness concern retailer is more aggressive, while the self-due fairness concern retailer is more reasonable for both the manufacturer and the retailer. Furthermore, we design a hybrid coordinate contract for the manufacturer to coordinate with the retailer.
Highlights
Because of the cost reduction advantage as well as the environmentally friendly advantage of the used-product remanufacturing, lots of manufacturers, such as HP, Lenovo, Apple, and Xerox, have launched the remanufacturing closed-loop supply chain (CLSC) strategy [1,2,3]
We find only under a specific condition, the feedback Markov equilibrium exists for a particular closed-loop supply chain system, and the expected return rate will approach to a stable state, whatever the preference of fairness concern is
We derived the evolutionary path of the return rate under the equilibrium control strategies for different models with different fairness concern types
Summary
Because of the cost reduction advantage as well as the environmentally friendly advantage of the used-product remanufacturing, lots of manufacturers, such as HP, Lenovo, Apple, and Xerox, have launched the remanufacturing closed-loop supply chain (CLSC) strategy [1,2,3]. De Giovanni and Zaccour [17] investigated the optimal outsource problem of used-product collecting for the manufacturer in a CLSC, where the third-party firm or the retailer can engage in the collection activities These papers mainly focused on the reverse channel choice problem in a CLSC with only one supply chain member involved in the return activities. Using the differential game model, our paper focuses on coping with the used-product return problem in the CLSC with retailer collecting as well as fairness concern for the retailer. Our study incorporates the concept of fairness into the retailer collecting closed-loop supply chain and aims at investigating how the presence of fairness concern would affect the equilibrium strategies and profitability of the supply chain members in the stochastic model setting.
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