scholarly journals Fair but Risky? Recycle Pricing Strategies in Closed-Loop Supply Chains

2018 ◽  
Vol 15 (12) ◽  
pp. 2870 ◽  
Author(s):  
Jianhong He ◽  
Lei Zhang ◽  
Xiao Fu ◽  
Fu-Sheng Tsai
Keyword(s):  
Supply Chain ◽  
Risk Aversion ◽  
Closed Loop ◽  
New Products ◽  
Transfer Price ◽  
Nash Bargaining ◽  
Pricing Strategy ◽  
Behavioral Factors ◽  
Waste Products ◽  
Fairness Concern

We argue that a Nash bargaining model with behavioral factors (i.e., fairness concern and risk aversion) should be introduced to the price strategizing process in the context of a closed-loop supply chain. We consider three different pricing models: The first is when both the manufacturer and the retailer have fairness concerns; the second is when both the manufacturer and the retailer have risk aversion; and the final is when the manufacturer has risk aversion but the retailer has both risk aversion and fairness concern. Then we examine the model with game theory. The results have shown that fairness and risk aversion change the optimal pricing strategy, which affects the expected profits of retailers and manufacturers. The impacts of two (relatively irrational) behavioral factors on the wholesale and retail prices of new products, the recycle price and recycle transfer price of the waste products, are not the same. For new products, the wholesale price is most affected by behavioral factors and the sales price scores second. For waste recycling products, the transfer price is most affected by behavioral factors and the recycle price scores second. When considering fairness and risk aversion in retail, fairness concern is good for both manufacturers and retailers. This innovative pricing strategy model adds implications for sustainability in supply chain operations.

scholarly journals A Study of the Closed-Loop Supply Chain Coordination on Waste Glass Bottles Recycling

2016 ◽  
Vol 2016 ◽  
pp. 1-9 ◽  
Author(s):  
Wenxue Ran ◽  
Fan Chen ◽  
Qianni Wu ◽  
Sen Liu
Keyword(s):  
Supply Chain ◽  
Closed Loop ◽  
Numerical Study ◽  
Supply And Demand ◽  
Waste Glass ◽  
Manufacturing Cost ◽  
Single Node ◽  
Closed Loop Supply Chain ◽  
Waste Products ◽  
Glass Bottles

The recycling of waste products can sharply save manufacturing cost and improve the economic efficiency and corporate-reputation. It also has a great effect on the environment and resources protection. In the management of the closed-loop supply chain, the recycling of waste products and decision-making on pricing often directly affect the supply and demand of products and the operation efficiency of supply chain. Therefore, first we take waste glass bottles as an example and establish a mathematical model to solve the profit of manufacturers and retailers solely. Then, we analyzed whole supply chain profit under a dual-channel recycling condition which is directly recycled by consumers or by retailers. Finally, we concluded that no matter what product’s price, quality, profit, or operational efficiency of supply chain is, the overall recycling is better than the single node recycling model. Based on the analysis, we developed a new model to coordinate the profit of manufacturers and retailers in the supply chain with revenue-sharing contract. A numerical study shows that this approach is applicable and effective.

scholarly journals Pricing Strategies in Dual-Channel Reverse Supply Chains Considering Fairness Concern

2019 ◽  
Vol 16 (9) ◽  
pp. 1657 ◽  
Author(s):  
Di Wu ◽  
Juhong Chen ◽  
Ruyu Yan ◽  
Ruijun Zhang
Keyword(s):  
Supply Chain ◽  
Transfer Price ◽  
Internet Technology ◽  
Supply Chain System ◽  
Chain System ◽  
Pricing Decisions ◽  
Dual Channel ◽  
Fairness Concerns ◽  
Fairness Concern ◽  
Offline Channels

The fierce competition in the recycling industry and the rapid development of internet technology has prompted recycling centers to develop a dual-channel reverse supply chain with both offline and online recycling channels. After the introduction of online channels, recycling centers and third-party recyclers (TPR) have paid attention to the division of profits in supply chain systems and the behavior of fairness concerns. Therefore, it is necessary to help recycling enterprises make pricing decisions in consideration of fairness concerns. This paper is aimed at answering the following two main questions: (1) When the recycling center or TPR have fairness concerns, how does the optimal pricing and revenue of supply chain members change when both sides are neutral? (2) When the fairness concern coefficient changes, how does the overall revenue of the supply chain system change? How should supply chain members adjust their pricing decisions to maximize their own profits? In order to solve the above problems, Stackelberg game models were made from three aspects: both sides are neutral, only the TPR has fairness concerns, and only the recycling center has fairness concerns. Based on the results of the example analyses for the model, we found that when only the TPR has fairness concerns, the profit of the recycling center and the transfer price of offline channels will decrease, while the profit of TPR is the opposite. Furthermore, when only a recycling center has fairness concerns, it will lead to the reduction of not only the recycling price and transfer price of offline channels, but also the profits of the entire supply chain system. Specially, whether it is for a recycling center or TPR, a lower level of fairness concern coefficient has a stronger impact on pricing and revenue than at high levels.

scholarly journals How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?

2019 ◽  
Vol 11 (7) ◽  
pp. 1898 ◽  
Author(s):  
Zongbao Zou ◽  
Fan Wang ◽  
Xiaofan Lai ◽  
Jingxian Hong
Keyword(s):  
Game Theory ◽  
Supply Chain ◽  
Closed Loop ◽  
New Products ◽  
Environmental Awareness ◽  
Third Party ◽  
Technology Licensing ◽  
Theory Approach ◽  
Potential Threat ◽  
Closed Loop Supply Chain

As sustainability issues are receiving increasing attention in society, in recent years many manufacturers have been adopting remanufacturing via technology licensing. This paper uses a game theory approach to investigate this strategy of a manufacturer under a closed-loop supply chain consisting of one supplier, one manufacturer, and one third-party remanufacturer (TPR), with the consideration of customer environmental awareness. In particular, the supplier supplies the components to the manufacturer and the manufacturer adopts technology licensing remanufacturing via the TPR. We explicitly characterize the reactions between the supplier and the manufacturer as being in equilibrium after adopting the technology licensing. We find that only when remanufacturing is a potential threat to the supplier is the performance of the supply chain improved and the double marginalization effect effectively eliminated. Moreover, remanufacturing by technology licensing only increases the profit of the manufacturer, but decreases the profit of the supplier. Interestingly, contrary to traditional wisdom, the existence of remanufactured products does not reduce the quantity of new products. Furthermore, remanufacturing by technology licensing may not always improve the environment, but customers in the market have environmental awareness that facilitates remanufacturing.

scholarly journals Competition and Integration in Closed-Loop Supply Chain Network with Variational Inequality

2012 ◽  
Vol 2012 ◽  
pp. 1-21 ◽  
Author(s):  
Gengui Zhou ◽  
Yuxiang Yang ◽  
Jian Cao
Keyword(s):  
Supply Chain ◽  
Variational Inequality ◽  
End Of Life ◽  
Closed Loop ◽  
New Products ◽  
Horizontal Merger ◽  
Supply Chain Network ◽  
Closed Loop Supply Chain ◽  
Production Quantity ◽  
And Storage

A closed-loop supply chain network involves the manufactured and remanufactured homogeneous products. It comprises operation links to represent business activities including manufacturing/remanufacturing activities, treatment activities for EOL products, transportation activities, and storage activities, which are performed by the firms. Among all closed-loop supply chain problems, the horizontal merger of oligopolistic firms is so important and attracting to both businessman and researchers. In this paper, the interaction of the competitive firms prior to horizontal merger is analyzed. Three networks including prior to horizontal merger, postpartial merger, and complete merger are studied. Simultaneously, three economical models for these networks on different conditions of mergers are established and discussed. The variational inequality formulations are used for these three models, whose solutions give out the production quantity of new products, and remanufactured products, the product flows for new products, remanufactured products and end-of-life products at every path, the demand quantity, the recovery quantity of end-of-life products and the equilibrium prices. Finally, numerical examples are tested and illustrated for the proposed models.

scholarly journals Development of cores acquisition model with two switching mechanisms in a retailer-oriented closed-loop supply chain system

2021 ◽  
Vol 2 (3 (110)) ◽  
pp. 6-15
Author(s):  
Evi Yuliawati ◽  
Pratikto Pratikto ◽  
Sugiono Sugiono ◽  
Oyong Novareza
Keyword(s):  
Supply Chain ◽  
Closed Loop ◽  
New Products ◽  
Product Returns ◽  
Fixed Rate ◽  
Supply Chain System ◽  
Closed Loop Supply Chain ◽  
Flat Rate ◽  
Taking Charge ◽  
Rate Mechanism

Retailer-Oriented Closed-Loop Supply Chain (ROCLSC) is an integration of forward and reverse supply chains with retailer taking charge of the remanufacturing, distribution, and collecting activities. This type of mechanism is quite effective, since the majority of product returns management is performed by the retailer. However, in practical industries, the implementation of ROCLSC is still limited. In this study, we investigate a ROCLSC system that involves an Original Equipment Manufacturer (OEM) and a retailer. OEM plays a role as a producer of new products, while the retailer is in charge of remanufacturing, collecting, as well as selling and distributing both newly manufactured and remanufactured products. We develop a mathematical model to maximize the profit of each party. Although several studies have developed models for cores acquisition, here we apply a different cores switching mechanism. We introduced the fixed rate and flat rate mechanisms used in the business-to-business (B2B) system, where product functions are very important to consumers. In addition, this research focuses on ROCLSC where most of the existing cores acquisition models are Manufacturer-Oriented Closed-Loop Supply Chain (MOCLSC). The result of this study shows that the retailer will get higher profits when the product returns are acquired through the fixed rate mechanism, rather than the flat rate mechanism. Therefore, determining the optimal amount of cores collected through the fixed rate mechanism will increase the retailer’s profit, as well as joint profit of both parties. From the results, we also point out an interesting note that the retailer should increase efforts to sell new products along with the increasing proportion of consumer Willingness to Pay (WTP) for remanufactured products. Hence, both OEM and retailer profits can be increased consecutively

scholarly journals Closed-loop Supply Chain with Advertising Investment and Reward-Penalty Mechanism Based on Different CSR Sharing Models

2021 ◽  
Vol 257 ◽  
pp. 02086
Author(s):  
Yi Liu ◽  
Yanting Huang
Keyword(s):  
Corporate Social Responsibility ◽  
Supply Chain ◽  
Social Responsibility ◽  
Social Welfare ◽  
Closed Loop ◽  
Closed Loop Supply Chain ◽  
Waste Products ◽  
Investment Level ◽  
Corporate Social ◽  
The Impact

This paper considers a closed-loop supply chain (CLSC) consisting of a manufacturer and a retailer based on different corporate social responsibility (CSR) behaviors. In addition, the advertising investment and government’s reward-penalty mechanism (RPM) are also taken in account. To explore the impact of CSR behaviors on supply chain, we developed three models: (1) Only the manufacturer undertakes CSR (model M); (2) only the retailer undertakes CSR (model R); (3) the manufacturer and the retailer share CSR (model MR). By analyzing the results, we found that: (1) The advertising investment level and waste products return rate both increase with the increase of the extent to members undertake CSR when there is only retailer undertakes CSR and when the manufacturer and retailer share CSR, and remain unchanged when there is only the manufacturer undertakes CSR; (2) the overall social welfare increases with the increase of the extent to members undertake CSR no matter which member undertakes CSR, and reaches the highest when there is only the retailer undertakes CSR; (3) it is the most conductive for the performance of the closedloop supply chain when there is only the retailer undertakes CSR.

scholarly journals Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

2020 ◽  
Vol 12 (6) ◽  
pp. 2411 ◽  
Author(s):  
Lijun Meng ◽  
Qiang Qiang ◽  
Zuqing Huang ◽  
Baoyou Zhang ◽  
Yuxiang Yang
Keyword(s):  
Supply Chain ◽  
Closed Loop ◽  
New Products ◽  
Sustainable Manufacturing ◽  
Third Party ◽  
Government Consumption ◽  
Closed Loop Supply Chain ◽  
Subsidy Policy ◽  
Optimal Pricing Strategy ◽  
The Government

Due to the increasing awareness of sustainable manufacturing, remanufacturing has been widely accepted by enterprises in many countries. In the process of Closed-Loop Supply Chain (CLSC) development, to stimulate the demand for remanufactured products, the Chinese government’s interventions such as the “Trade old for Remanufactured” program cannot be ignored. However, prior research has not answered the questions of whether governments should offer consumption subsidies and how to determine the optimal subsidy value. This paper investigates the optimal government consumption subsidy policy and its impact on the operation of Closed-Loop Supply Chain (CLSC) where an Original Equipment Manufacturer (OEM) produces new products, while a Third-Party Remanufacturer (TPR) remanufactures the used products collected from consumers. A game model with a leader (government) and two followers (OEM and TPR) is then introduced. The government determines the consumption subsidy to maximize the social welfare, while the TPR and OEM attempt to maximize their own profit functions. Game theoretic models are proposed to explore and compare the scenarios, i.e., CLSC with a consumption subsidy policy and without a consumption subsidy policy. The equilibrium characteristics with respect to the government’s consumption subsidy decisions and the price decisions for chain members are derived. Based on the theoretical and numerical analysis, the results show that: (1) governments should not always offer a consumption subsidy; (2) the consumption subsidy cannibalizes demand for new products while boosting the demand for remanufactured products; (3) the consumption subsidy should be shared between the TPR and consumers when the TPR raises the sales price of remanufactured product; (4) the members of the CLSC do not always benefit from the consumption subsidy policy.

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