Reverse Revenue Sharing Contract versus Two-Part Tariff Contract under a Closed-Loop Supply Chain System

Abstract

The importance of remanufacturing has been recognized in research and practice. The integrated system, combining the forward and reverse activities of supply chains, is called closed-loop supply chain (CLSC) system. By coordination in the CLSC system, players will get economic improvement. This paper studies different coordination performances of two types of contracts, two-part tariff (TTC) and reverse revenue sharing contract (RRSC), in a closed-loop system. Through mathematical analysis based on Stackelberg Game Theory, we find that it is easy for manufacturer to improve more profits and retailer’s collection effects by adjusting the ratio of transfer collection price through RRSC, and we also give the function to calculate the best ratio of transfer collection price, which may be a valuable reference for the decision maker in practice. Besides, our results also suggest that although the profits of the coordinated CLSC system are always higher than the contradictory scenario, the RRSC is more favorable to the manufacturer than to the retailer, as results show that the manufacturer will share more profits from the system through RRSC. Therefore, RRSC has attracted the manufacturers more to closing the supply chain for economic consideration.

Store-Brand Production Arrangement Based on the Game Theory

“…Facing a sensitive demand and based on the multiperiod dynamic game theory, Zhou and Ju [28] analyze the reputation effect and ratchet effect in the multiperiod dynamic game service supply chain. Similarly to our paper, both Li et al [29] and 3 Shi et al [30] use Stackelberg-game theory. However, Li et al [29] investigate impacts of risk aversion of supply chain players on price and quality decisions.…”

“…However, Li et al [29] investigate impacts of risk aversion of supply chain players on price and quality decisions. On the other hand, Shi et al [30] study different coordination performances of different contracts in a closed-loop supply chain system. Interestingly, Malmir et al [31] use game theory to model the strategies of supplying medical equipment in a hospital supply chain.…”

CSR Remanufacturing Supply Chains under WTP Differentiation

“…The majority of our research concerns the coordination problem by adopting relevant contracts in the supply chain. Understandably, the coordination of the supply chain has been extensively studied, and many coordination strategies are theoretically optimal and feasible in practice, such as the wholesale price coordination contract, the revenue sharing contracts, buyback, and the discount contract [19,21,[30][31][32][33][34].…”

“…To solve the above problems, this paper adopts the classic game theory decision, which plays a critical role in supply chain decision-making. Many prior studies also applied this method to solving related [19,22,34,35]. The manufacturer serves as a Stackelberg leader while the retailer serves as a follower, i.e., the decision process follows this principle.…”

Effects to implement the open-innovation coordinative strategies between manufacturer and retailer in reverse supply chain

“…Generally, various cooperation strategies with partners was done by various contraction methods such as benefit-sharing, sharing of burden of expense (Mafakheri and Nasiri 2013;Govindan and Popiuc 2014;Li et al 2014;Shi et al 2016). This paper reviews a few contract options available with manufacturer and retailer to collect a higher return rate of used products from consumer in reverse supply chain.…”