Closed-loop Supply Chain Members Research Articles

Optimal Alliance Strategy and Its Impact in a Closed-Loop Supply Chain by considering Greenness and Service Effort

This paper handles Stackelberg game models in light of different alliance strategies in a closed-loop supply chain (CLSC) consisting of a manufacturer, a retailer, and a third-party recycler. In this CLSC, four scenarios are examined: the decentralized case, the manufacturer and the retailer forming an alliance, the manufacturer and the third-party recycler forming an alliance, and the centralized case. And in these Stackelberg game models, a comparison between four alliance strategies is analyzed by considering greenness and service effort. The effect of alliance strategy on the decisions of the CLSC system, consumer, environment, and society is also investigated. The main objective is to find out the optimal price, greenness level, and service effort to maximize the CLSC members’ profits and give the optimal alliance strategy by using theoretical analysis. It is found that the alliance strategy improves the operation efficiency of the CLSC, and it also benefits consumers, the environment, and society. The MR alliance strategy is more effective than the MT alliance strategy, but it cannot achieve the efficiency of a centralized scenario. Finally, numerical examples are illustrated to justify the feasibility and practicability of the proposed models in reality.

Pricing strategy of closed loop supply chain considering different CSR investment modes

More and more companies are beginning to realize that incorporating corporate social responsibility (CSR) and sustainable development into supply chain strategies and operations can bring them more competitive advantages. In the case that the manufacturer or retailer performs CSR through profit donation, the pricing decision-making problem of closed-loop supply chain (CLSC) with dominant retailer under different CSR investment modes is studied. The decision-making models of CLSC under the manufacturer’s and retailer’s CSR investment mode are constructed respectively. The conditions for enterprises to fulfil CSR through profit donation and the influence of different CSR investment modes on the pricing of new products and recycling of waste products are discussed. The research shows that no matter what kind of CSR investment mode, only when the consumers are more sensitive to the CSR investment of enterprises, the manufacturer and retailer will fulfil the CSR through profit donation. The CSR investment mode of the manufacturer is more beneficial to consumers, environment, CLSC members and whole system. No matter whether the dominant retailer carries out CSR investment or not, she always obtains more channel profits than the manufacturer.

Collection and Coordination Strategies in a Dual-Channel Closed-Loop Supply Chain Under Manufacturer Diseconomies of Scale

Manufacturing enterprises often face the problem of an increasing production cost per unit of output—that is, diseconomies of scale—due to technology or management ability. This paper examines the collection channel selection and coordination strategies of a dual-channel closed-loop supply chain (CLSC) in the presence of manufacturer diseconomies of scale. Decision models for a dual-channel CLSC with single- and dual-channel waste product collection are constructed from the perspectives of centralized and decentralized decision-making, and the effects of diseconomies of scale and sales/collection competition on the pricing of new products and the waste product collection rate are analyzed. Moreover, criteria for selecting a collection channel are given for CLSC members and the system as a whole, and two-part tariff contracts are designed to coordinate the dual-channel CLSC under different collection channels. We find that the optimal pricing decision and members’ profits are negatively correlated with diseconomies of scale and positively correlated with sales competition. Under the dual-channel sales structure, the direct sales volume is more than twice that of retail sales, the stronger the sales competition, the more pronounced this advantage is. Further, from the perspective of collection, when collection competition is weak, the dual-channel collection strategy is optimal, while as competition increases, the single-channel collection strategy may be better. The manufacturer’s collection rate is more than twice that of the retailer under dual-channel collection, and the stronger collection competition is, the larger this gap is. Finally, the conclusions are verified by numerical simulation, and management insights are proposed.

Quality information acquisition and disclosure with green manufacturing in a closed-loop supply chain

Green manufacturers are faced with decision problems whether to acquire the quality information from third-party assessment agencies and to disclose the quality information to other supply chain members. While the existing research of closed-loop supply chain (CLSC) has not considered the voluntary and mandatory information disclosure, this study considers the quality information disclosure strategies of a green manufacturer after acquiring the quality information in the closed-loop supply chain. (1) The study first evaluates the performance of this new closed-loop supply chain system considering the quality information disclosure and acquisition, by new models integrating the quality information decisions with the remanufacturing operational decisions. To our knowledge, this paper is an early research of closed-loop supply chain to consider and compare voluntary information disclosure and mandatory information disclosure. (2) The study provides a new decision tool to assist green manufacturers in making decisions on acquiring the quality information from a third-party quality assessment agency before disclosing the quality information. Interestingly, the study finds that the profits of closed-loop supply chain members are higher under the mandatory information disclosure when the green manufacturer refuses to assess the product quality and acquire the information from a third-part quality assessment agency. (3) The study further considers the consumer preference of green products, and get useful managerial insights that the green manufacturer is willing to pay a higher information acquisition cost to acquire the quality information when consumers prefer high quality. (4) Finally, the study provides the practical implications and finds the new condition under which a green manufacturer is willing to disclose the product quality information in closed-loop supply chains.

Closed-Loop Supply Chain Coordination under a Reward–Penalty and a Manufacturer’s Subsidy Policy

Government legislation significantly impacts closed-loop supply chain (CLSC) operations. This study examines the collection rate of and decisions on the product greening improvement level in a three-level CLSC with the government’s reward–penalty and a manufacturer’s subsidy policy. Four game-theoretic models are analyzed in order to evaluate the ways in which the policy and revenue-sharing contracts (RSCs) between the manufacturer and retailer affect the CLSC members’ optimal decisions and profits. We found that a reward–penalty and subsidy policy raise the collection rate, as well as the product greening improvement level. A manufacturer’s financial conflict of interest can be mitigated using RSCs. The RSCs between the manufacturer and the retailer also increase the profit of a recycling company that successfully coordinates the CLSC. An interesting result is that, when the RSCs are used under the subsidy policy, the collection rate is higher than it is in a centralized model. We also found that the subsidy level needs to be adjusted according to the price of the recycling resources, and that increasing the value of the recyclable resources and lowering the recycling costs in the early stages of the supply chain collaboration could lead to higher environmental sustainability. These results illustrate that using an RSC can effectively coordinate the CLSC, and can thus help policy implementation by governments.

Optimal pricing and remanufacturing mode in a closed-loop supply chain of WEEE under government fund policy

This paper investigates a closed-loop supply chain (CLSC) of WEEE consisting of a manufacturer, a retailer and a third party recycler, where the manufacturer can remanufacture used WEEE products or the manufacturer also can authorize the retailer to remanufacture used WEEE products. Combining the remanufacturing mode and government fund policy, four dynamic game models are found to analyze the effect of government fund policy on decisions of CLSC. In addtion, this study investigate the effect of government fund policy on consumer, environment and society using numerical analysis. The results show that: Without government fund policy, the manufacturer remanufacturing mode is better for CLSC members. By contrast, under the government fund policy, the retailer remanufacturing mode is the best choice. When government fund policy parameters meet a certain range, it can increase supply chain members’ profits and promote the recycling and remanufacturing of used WEEE products. The changing trends of supply chain members, consumer surplus, environmental impact and social welfare are the same, only the change thresholds of government fund policy parameters are quite different. When the government sets appropriate fund policy parameters, government fund policy is benefit for supply chain members, consumer, environment and society.

Optimal Strategy for a Closed-Loop Supply Chain Considering Recycling and Warranty Channels

In this paper, four closed-loop supply chain (CLSC) game models with different recycling channels and warranty channels are proposed: (a) manufacturer recycling and warranty model, (b) manufacturer recycling and retailer warranty model, (c) retailer recycling and manufacturer warranty model and (d) retailer recycling and warranty model. The impacts of different recycling channels and warranty channels on the manufacturer, retailer and entire supply chain system are systematically analyzed from the perspective of the consumers, CLSC members and environment. The optimal strategies for remanufacturing systems under different channels are discussed and two contracts are proposed to coordinate supply chain members. By comparing and analyzing the optimal equilibrium solutions for different scenarios, the following conclusions are obtained: (1) The retailer recycling and warranty mode ( $$R-R$$ ) not only extends the warranty period of the product, but also improves the recovery rate of the CLSC system. (2) Under certain sharing ratios, the revenue-sharing contract and cost-sharing contract can effectively coordinate the manufacturer and retailer in the worst scenario. (3) Compared with the manufacturer recycling mode, the optimal profit of each CLSC member under the retailer recycling mode is significantly higher. Eventually, a set of numerical examples is provided to verify the above conclusions and conduct the sensitivity analysis on the optimal decisions in the proposed four different remanufacturing scenarios.

Research on the profit change of new energy vehicle closed-loop supply chain members based on government subsidies

Based on the research background of government-subsidized new energy vehicle market, this paper constructs a profit distribution model of closed-loop supply chain members without financial subsidies and with different objects of government subsidies. Using the idea and method of game theory, the profit distribution of five models of supply chain members is solved respectively, and the sales channel pricing, recovery channel pricing, change the range of profit of each supply chain member and change of profit distribution proportion of closed-loop supply chain under different subsidy objects are compared. Therefore, it studies how the profit is transferred and analyzes the influence of different government subsidies on the competitiveness of the supply chain.

Comparison of Cooperation Modes in a Two-Period Closed-Loop Supply Chain System considering Green Manufacturing

In order to improve the efficiency of collection and green manufacturing level in a closed-loop supply chain (CLSC) system, the manufacturer invests green manufacturing efforts in product design and production process and intends to cooperate with other CLSC members to achieve excellent performance. In a two-period CLSC system consisting of one manufacturer, one retailer, and one third-service provider, a game-theoretical approach is adopted to compare the optimal decisions and profits of the three green manufacturing cooperation modes, namely, the manufacturer cooperates with the retailer and third-service provider, respectively, and the noncooperation mode is a benchmark. Moreover, the impact of different cooperation modes on CLSC decision-making is analyzed as well. The results indicate that the influence of difference among cooperation modes on CLSC decision is significant, and cooperation is always better than noncooperation. From the perspective of consumers as well as recycling and profit, although the collection rate of used products is not the highest when the manufacturer cooperates with the retailer, the price of product is the lowest and the green property of product is the most obvious; thus, this is regarded as the suitable cooperation mode after a comprehensive analysis. Besides, a coordination mechanism is designed to solve the inefficiency caused by double marginalization. Finally, numerical examples are presented to intuitively observe the relationships between decisions and profits and the impact of different parameters on them in the three modes, and some management inspirations are proposed ultimately.

How manufacturer's integration strategies affect closed-loop supply chain performance

This paper considers a manufacturer's optimal integration strategy in a three-level closed-loop supply chain including one manufacturer, one retailer and two competing collectors. We study how the manufacturer's integration strategies of retailing and collecting channels affect the closed-loop supply chain members' optimal decisions and maximum profits, and also investigate the interaction between the collection competition and the manufacturer's integration strategies. Through comparing various integration strategies, some new and interesting management insights are obtained: to improve collection rate of the whole closed-loop supply chain and maximise the surplus profit of integration strategy, the manufacturer's best opt is to integrate the retailer and only one collector when the collection competition is intense.

Coordinating economic incentives, customer service and pricing decisions in a competitive closed-loop supply chain

This study contributes to the closed-loop supply chain (CLSC) literature by investigating: (a) a new function for supply of used products based on the service competition between two dealers and (b) manufacturer’s economic incentives to the dealers so as to persuade them to return the collected products. In order to achieve the optimal values of CLSC members’ decisions on pricing, economic incentives, and the level of customer service, both traditional and centralized decision-making structures are investigated. Eventually, a new expense-sharing contract is developed to achieve coordination in the proposed CLSC. Results of implementing the proposed model indicate that coordinating a CLSC under a competitive situation significantly improves the economic performance of the whole CLSC. Moreover, the expense-sharing contract is beneficial for the proposed CLSC from social viewpoint, since the dealers can provide better qualified services and more customers will be satisfied. Consequently, more used products are returned to the manufacturer, which in turn improves the environmental performance of the investigated CLSC.

Analysis of Factors Affecting the Profits of Closed-Loop Supply Chain Members Under Different Subsidy Objects

Based on the research hypothesis in a fully competitive closed-loop supply chain for mixed recycling channels, different closed-loop supply chain pricing models are established for the government’s strategy of adopting different subsidies (consumers, retailers, manufacturers or third-party recyclers). In this work, we use game theory to establish a price formula, and identify the factors affecting the profit of five closed-loop supply chain members. Through solution verification, the sales channel pricing, the recycling channel pricing and the channel member profit change of the closed-loop supply chain under different subsidy objects are compared after changing only one influencing factor. By providing a reference and suggesting how the government can control these factors, this study can assist the government to put subsidies in place, and optimize the operations of the closed-loop supply chain.

Game-Theoretic Analysis to Examine How Government Subsidy Policies Affect a Closed-Loop Supply Chain Decision

The pros and cons of government subsidy policies in a closed-loop supply chain (CLSC) setting on optimal pricing, investment decisions in improving product quality, and used product collection under social welfare (SW) optimization goal have not been examined comprehensively. This study compares the outcomes of three government policies under manufacturer-Stackelberg (MS) and retailer-Stackelberg (RS), namely (i) direct subsidy to the consumer, (ii) subsidy to the manufacturer to stimulate used product collection, and (iii) subsidy to the manufacturer to improve product quality. Results demonstrate that the greening level, used product collection, and SW are always higher under the RS game, but the rate of a subsidy granted by the government is always higher under the MS game. Profits for the CLSC members and SW are always higher if the government provides a subsidy directly to the consumer, but productivity of investment in the perspective of the manufacturer or government are less. In a second policy, the government organizations grant a subsidy to the manufacturer to stimulate used product collection, but it does not necessarily yield the desired outcome compared to others. In a third policy, the manufacturer receives a subsidy on a research and development (R&D) investment, but it yields a sub-optimal greening level. This study reveals that the outcomes of subsidy policies can bring benefit to consumers and add a degree of complication for CLSC members; government organizations need to inspect carefully among attributes, mainly product type, power of CLSC members, and investment efficiency for the manufacturer, before implementing any subsidy policies so that it can lead to an environmentally and economically viable outcome.

Research on the impact of green innovation alliance mode on decision-making of two-cycle closed-loop supply chain

Based on the previous researches on closed-loop supply chain (CLSC), this paper takes the life cycle attributes of products into consideration and investigates the situation in which the manufacturer has a tendency to invest in green innovation and establish alliance with other supply chain members. In a two-cycle CLSC consisting of one manufacturer, one retailer and one-third party recycler, Stackelberg game method is adopted to analyze and compare the optimal decisions and profits of CLSC members as well as the efficiency of three green innovation alliance modes. The results show that the impact of difference among those three alliance modes on CLSC decision is obvious, and the operational efficiency of CLSC is always higher than that without alliance. From the perspective of consumers, environmental protection and profits, the green innovation alliance formed by manufacturer and retailer enjoys the lowest price, the highest green innovation level, the highest alliance profit and the relatively high level of resource recycling, which is the best choice for manufacturer. Finally, numerical examples are presented to obtain some conclusions and give some management inspirations intuitively. It is found that the coefficient of profit reduction in the second cycle has a significant impact on the decision-making and profits of the members and entire CLSC, but the positive influence of consumers’ sensitivity to the green innovation of manufacturer is not obvious.

Design investment and advertising decisions in direct-sales closed-loop supply chains

This study analyzes decision making regarding a direct-sales closed-loop supply chain that consists of an original equipment manufacturer (OEM), a remanufacturer and two advertising agents. A two-stage no cooperative game is established: the OEM determines the design investment and advertising price of new product, the remanufacturer decides the advertising price of a remanufactured product in the first stage at the same time, and the two advertising agents determine advertising level. This paper solves the game strategies backward and then analyzes the impacts of the parameters of design and advertising on equilibrium decisions and the profits of closed-loop supply chain members. The results show that (1) unit advertising cost and design cost decrease in equilibrium advertising price, design investment and advertising level, but there is a positive correlation between advertising elasticity of demand and equilibrium decisions; (2) the design investment parameter of cost-savings is positively related to the equilibrium design investment level, advertising price and advertising decisions; and (3) if the OEM’s investment budget is too small, the equilibrium results cannot be obtained. In this case, to pursue maximum profit, the OEM need to allocate capital to achieve a balance between design and advertising investment. This study can support the decision making of direct-sales closed-loop supply chain enterprises.

An Investigation of the Optimal Closed-Loop Supply Chain for Electronic Products

전자제품 시장의 글로벌 확장과 더불어, 불완전한 재활용 시스템으로 인한 폐전자제품 (waste electrical and electronic equipment, WEEE)은 심각한 환경 오염을 초래하고 있다. 환경 보호를 위한 폐전자제품 재활용의 중요성이 부각되면서 많은 국가가 관련 법규를 수립하기 위해 노력하고 있다. 본 논문은 제 3자 재활용 업체를 통해 폐전자제품을 회수하는 폐쇄형 공급망 (closed-loop supply chain, CLSC)을 연구한다. 폐쇄형 공급망을 가진 제조업체는 폐전자제품의 재활용 부품을 사용하여 재제조 품목을 생산하는 동시에 새로운 부품을 사용하여 새로운 품목을 생산한다. 그러나 재제조 품목에 대한 소비자의 낮은 지불 의지(willingness to pay, WTP)는 폐전자제품의 재활용 및 재제조의 수익에 부정적인 영향을 끼친다. 따라서 본 연구는 분산식(decentralized) 의사결정, 중앙 집중식(centralized) 의사결정 및 협조(coordination)의사결정 모델을 포함한 세 가지 유형의 폐쇄형 공급망 의사 결정 모델을 통해, (1) 정부 보조금 및 벌금이 폐쇄형 공급망 구성원의 의사결정에 미치는 영향; (2) 재제조 품목에 대한 소비자 지불 의지가 폐쇄형 공급망 구성원의 의사결정에 미치는 영향; (3) 중앙집중식 의사결정 모델 하에서 폐쇄형 공급망 구성원의 수익배분을 조율하는 수익 공유 계약 및 수량 할인 계약에 대해 연구한다. 본 연구는 정부 보조금/벌금 및 재제조 품목에 대한 소비자의 지불 의지의 영향 하에, 수익을 극대화하기 위해 폐쇄형 공급망의 의사결정에 가이드를 제공한다. 또한, 중앙 집중식 폐쇄형 공급망은 분산식 폐쇄형 공급망보다 수익성이 높고, 수익 공유 계약 및수량 할인 계약으로 이루어지는 협조 모델은 중앙 집중식 폐쇄형 공급망 내 구성원 수익의 조율이 가능함을 보여준다.The global expansion of the electronic product markets combined with an imperfect recycling system led to the increased production of waste electrical and electronic equipment (WEEE) and environmental pollution. As such, a growing number of countries are becoming aware of the importance of WEEE recycling to environmental protection, and they exert efforts to formulate related legislation. This study investigates the closed-loop supply chain (CLSC), which recycles WEEE through third-party recyclers. The manufacturers in the CLSC employ the recycled part of WEEE to produce remanufactured items, while they use new components to produce new items. However, consumers’ low willingness to pay (WTP) for remanufactured items makes the profitability of recycling and remanufacturing WEEE questionable. We examine three types of CLSC decision-making models, including decentralized, centralized, and coordination models, to investigate how government intervention and consumers’ WTP for remanufactured items influence the CLSC decisions and CLSC members’ profits. The results provide implications regarding the impact of government subsidies and consumers’ WTP for remanufactured items on the CLSC decisions. The results indicate that the centralized CLSC is more profitable than the decentralized CLSC, and that the coordination model with revenue sharing contract and quantity discount contract can effectively manage the CLSC.

Dilemma in two game structures for a closed-loop supply chain under the influence of government incentives

The government organizations grant incentives to promote green product consumption, improve green product quality, boost remanufacturing activities, etc. through various policies. The objective of this study is to highlight pros and cons of two incentive policies, namely (1) incentive on manufacturer’s R&D investment and (2) direct incentive to consumer based on greening level of the product on the optimal pricing and investment decisions in improving used product return and greening level decisions in a closed-loop supply chain (CLSC). Optimal decisions are derived under manufacturer and retailer-Stackelberg games, and results are compared to explore characteristics of optimal decisions, consumer surplus, and environmental improvement under two marketing strategies of a manufacturer. It is found that the greening level and used product return rate in a CLSC are always higher under retailer-Stackelberg game. If the manufacturer sets a target for greening level, the CLSC members may receive higher profits if consumer receives incentive because of higher consumer surplus. However, environmental improvement may be lower. If the manufacturer sets a product return goal, then CLSC members may compromise with consumer surplus or environmental improvement for receiving higher profits. In the presence of direct incentive to consumers, CLSC members can trade with product at lower greening level for higher profits. Moreover, investment in improving used product return is always less compared to the investment in improving greening level.

Coordination mechanism of dual-channel closed-loop supply chains considering product quality and return

The deficiency of green products from a quality perspective has attracted significant attention from consumers. The recurring explosions of smart cell phone batteries in recent years is why green products are deemed quality-deficient. However, few researchers has paid attention to this issue, and there is no consensus in the previous literature regarding the impact of returning defective products on vertical dual-channel management in closed-loop supply chains. According to past studies, there are two types of product returns: 1) defective item return and 2) waste product return. The model in our study is based on these two types. However, available studies are not based on this model. Second, we examine how closed-loop supply chain members determine the product quality and price in the presence of return on defective items. Based on our results, we design a revenue-sharing contract to motivate retailer's efforts in recycling waste products. Our paper demonstrates the effectiveness of the proposed coordination mechanism in mitigating retail price competitions and enhancing the total profit of dual-channel closed-loop supply chains, compared to non-coordination models. In addition, we also provide a practical managerial insight indicating that it may not be wise to pursue a low return rate for faulty products by making expensive quality improvements, and the increased quality may even worsen the entire supply chain in some scenarios.

Pricing Decisions in Closed-Loop Supply Chains with Peer-Induced Fairness Concerns

The importance of behavioral factors in the process of decision making is widely recognized in literature and practice. The aim of this paper is to examine the influence of collectors’ multiple fairness concerns on pricing decisions in a closed-loop supply chain (CLSC), which consists of one manufacturer, one retailer, and two collectors. Specifically, the collectors are concerned with both distributional fairness and peer-induced fairness. By considering fairness concerns and selecting Nash bargain solution as the reference point of fairness distribution, this paper studies the equilibrium solution of Stackelberg game models in the CLSC with symmetrical and asymmetrical information of fairness concerns, respectively. The results show that in the former case, distributional fairness is always at the cost of sacrificing the manufacturer’s profits, which is a means of gaining more benefits for the collectors. In the latter case, the profits of both the manufacturer and the collectors turn into a loss. No matter in which case, the collector who is concerned with both distributional and peer-induced fairness is always in a passive position. Generally speaking, whether the decision maker concerns fairness and whether it can be perceived by the CLSC members both impact the members’ decision making. Additionally, the utilities of both the manufacturer and the collectors receive Pareto improvement under the proposed incentive contract.

A selective survey of game-theoretic models of closed-loop supply chains

This paper surveys two key issues in closed-loop supply chain (CLSC) research: return functions and coordination mechanisms. The return function provides the rule according to which end-of-life/use products are returned to a collector. The coordination mechanisms consist of the adoption of a certain mechanism (e.g., a contract) to align the closed-loop supply chain members’ objectives. We describe latest thinking in these two major CLSC-related fields and suggest future research directions to be undertaken.