Dynamic Collection Strategy and Coordination of a Remanufacturing Closed-Loop Supply Chain under Uncertainty

Abstract

This paper aims to investigate the uncertainty factors that impact the collection strategy of a remanufacturing closed-loop supply chain. The basis of this type of supply chain is the collection of used products, without which the remanufacturing of new products would be out of the question. In this paper, we considered the effect of stochastic disturbance on the collection process in a closed-loop supply chain consisting of a manufacturer and a retailer, in which the manufacturer is responsible for collecting the used products. Considering stochastic disturbance, in this research, we proposed a stochastic collection model, and derived the feedback control strategies for both the manufacturer and retailer. Next, we investigated the evolutionary path and probability distribution of the stochastic return rate. Finally, we proposed a contract to coordinate the decentralized closed-loop supply chain. The results showed that the manufacturer would improve the level of return effort as the intensity of stochastic disturbance increases. However, the disturbance would not affect the pricing strategies of the supply chain members. As a result of the stochastic disturbance, the return rate always hovered around the expected return rate, while the expectation and variance of the return rate remained stable from a long-term perspective. The expected value and variance of the return rate could decrease or increase with time, depending on the value of the initial return rate of the system.

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