Game Analysis and Coordination of a Closed-Loop Supply Chain: Perspective of Components Reuse Strategy

Abstract

This paper studies a closed-loop supply chain that covers three key members: Manufacturer, new components supplier, and recycled-components supplier. Considering the power of each member in the chain, we use game theory to analyze the optimal decision and coordination, particularly investigating the economic value of components reuse strategy. The results show that, in a decentralized setting, the value of components reuse highly depends on the attributes of the products. For the products with low price elasticity, reuse strategy is only beneficial to the recycled-components suppliers. Further investigation shows the manufacturer can use wholesale price contracts to coordinate and improve the supply chain’s performance.

Manufacturer’s cooperation strategies of closed-loop supply chain considering recycling advertising

“…Specifically, Asl-Najafi et al [5] examined the effect of product life cycle on CLSC coordination. Zhao et al [46] examined decision-making and coordination in a CLSC concerning component reuse. They discovered that reuse benefits only recycled component suppliers for low-price-elasticity products and manufacturers can use wholesale price contracts to improve supply chain coordination.…”

Closing the Gap: A Comprehensive Review of the Literature on Closed-Loop Supply Chains

“…Literature reviews (LRs) (8) [1,3,5,[9][10][11][12][13] Deterministic optimization (DO) models ( 14) [7,[14][15][16][17][18][19][20][21][22][23][24][25][26] Uncertain optimization (UO) models (20) [2,8,[27][28][29][30][31][32][33][34][35][36][37][38][39][40][41][42][43][44] Game-theoretic (GT) models ( 12) [6,[45][46][47][48][49][50][51]…”

“…Additionally, the study indicates that centralized systems, free from the constraints of double marginalization, show a clear preference for strategic lean programs, underlining their effectiveness in improving both sustainability and profitability within CLSC frameworks. Zhao et al [48] offered another angle, focusing on the importance of component reuse. Their CLSC includes a producer, a supplier of new components and a supplier of recycled components.…”

Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective

“…For instance, Xerox, Hewlett Packard Corporation, and Canon have been a leader in reusing their high-value and EoU copiers, computers, and cartridges, respectively, to manufacture new items with the same quality standards. However, other parties such as suppliers [108,172,271], remanufacturers [132,205], and retailers [57,254] are also considered to be the reprocessors individually. CLSCs are compared under different SPs such as Hong and Yeh [170] and Xiong, Zhao and Zhou [212] who developed models with either a manufacturer or supplier (M&S) to study a different type of collection in the electronics industry or to investigate environmental performance in the remanufacturing industry, respectively.…”

“…Overall, this paper suggested a general framework for studying game theory's contribution to CLSC models. Similarly, this procedure can be applied to analyze the recently developed models [106,112,270,271,276] in this context.…”