Reward-penalty mechanism for a two-period closed-loop supply chain

Wang, Wenbin; Ding, Junfei; Sun, Hao

doi:10.1016/j.jclepro.2018.08.211

Cited by 64 publications

(33 citation statements)

References 49 publications

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“…Government plays an important role in the development of CLSCs [36]. Therefore, more and more researchers pay attention to the government's intervention in CLSCs [36]. Many scholars have studied the impact of government subsidies to enterprises on the operation of CLSCs.…”

Section: Government Policy Of Closed-loop Supply Chainsmentioning

confidence: 99%

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

et al. 2020

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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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Section: Government Policy Of Closed-loop Supply Chainsmentioning

confidence: 99%

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

et al. 2020

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“…Their results show that: (1) the total returns of the closed-loop supply chain in the joint decision scenario is much higher than in the independent decision scenario; and (2) based on the Nash negotiation model, the benefits for the closed-loop supply chain members in the joint decision scenario greatly exceed those of independent decision scenario. Wang et al [18] expanded on the effectiveness of the reward and punishment mechanism (RPM) in the two-phase closed-loop supply chain. Parsaeifar et al [19] developed mathematical models of non-cooperative and concentrated scenarios to characterize pricing decisions and remanufacturing strategies and coordinate the overall supply chain performance, in addition to providing manufacturers with a three-way discount mechanism to achieve win-win results for the channel members.…”

Section: Sustainable Development and Closed-loop Supply Chain Managementmentioning

confidence: 99%

Warranty Period Decision and Coordination in Closed-Loop Supply Chains Considering Remanufacturing and Consumer Behavior

Zhu

2019

Sustainability

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The closed-loop supply chain management model is an effective way to promote sustainable economic development and environmental protection. Increasing the sales volume of remanufactured products to stimulate green growth is a key issue in the development of closed-loop supply chains. By designing an effective warranty strategy, customer’s perceived value can be enhanced and market demand can be stimulated. This study cuts through the warranty period of closed-loop supply chain products. Based on the perspective of consumer behavior, game theory is used to construct the optimal decision-making model for closed-loop supply chains. The optimal warranty decision making for new products and remanufactured products under centralized and decentralized decision-making models is discussed. Further, the impact of the closed-loop supply chain system with warranty services and the design of contract coordination is also shown. We show that consumer preference has a positive impact on the sales of remanufactured products and the profits of enterprises; with the extension of the new product and remanufacturing warranty period, the profit of the supply chain system first increases and then decreases, and the value is maximized at the extreme point in the manufacturer-led decision-making model. Furthermore, the leader gains higher profits with bargaining power, but the profit of the supply chain system under decentralized decision model is less than that of the centralized decision model, reflecting the double marginalization effect. The revenue sharing contract and the two-charge contract designed in this study coordinate the closed-loop supply chain system with warranty services, so that the member companies in the supply chain can achieve Pareto improvement.

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“…Li et al [22] examine the influences of vertical and horizontal cooperation models on the optimal decisions and performance of a low-carbon closed-loop supply chain with a manufacturer and two retailers and found that the completely centralized model was best in all optimal decision results among all models. Wang et al [1] examines the benefit of the reward-penalty mechanism (RPM) in a closed-loop supply chain that composes with a manufacturer and its collector and shows that the manufacturer prefers remanufacturing with RPM if the target collection rate is below a threshold; but the opposite is true if the target collection rate is too high. Turki et al [8] highlight the optimization of a manufacturing-remanufacturing-transport-warehousing closed-loop supply chain and intend to evaluate the optimal capacities of manufacturing stock, purchasing warehouse and the vehicle, as well as the optimal value of returned used end-of-life products.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Note that in both models, we allowed all consumers to appear as a vertical heterogeneity in the individual consumer's willingness-to-pay for new and remanufactured products [35,38]. Assumption 4 indicates that the retailer can achieve higher consumer satisfactions by providing higher service efforts (s), which accompanied a quadratic function of service levels, 1 2 ks 2 , where k is the scaling parameter [39][40][41].…”

Section: Assumptionmentioning

confidence: 99%

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A Sustainability Analysis on Retailer’s Sales Effort in A Closed-Loop Supply Chain

Yang

Zhang

et al. 2018

Sustainability

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With the development of the Internet, many brand name manufacturers including Apple, Lenovo, and Canon offer remanufactured products through their official website. Confronting the competition from remanufactured products that are available from the manufactured-owned channel, more and more retailers have recognized that customer service level is one of the most important performance metrics and have aggressively attempted to obtain larger market shares by providing high levels of post-sale services. Although numerous researchers have studied various competitive strategies in remanufacturing, to the best of our knowledge, there is little research highlighting whether and how economic performance and sustainability issues related to remanufacturing operations are affected by the retailer's service levels. In this paper, we fill this gap by developing two models for the closed-loop supply chain where all remanufactured products are available from the manufactured-owned channel, while the equilibrium behavior of the retailer can be characterized under two possible scenarios: (1) Confronting the cannibalization from direct channels where the retailer only responds on prices (i.e., Model P); or (2) on providing competitive prices and high service levels for new products (i.e., Model S). Our analysis suggests that, from managers' perspective, if the manufacturers care more about economic benefits, encouraging the retailer to provide higher levels of post-sale services is a beneficial strategy. If they are more concerned with environmental performance, Model P is preferred. However, from the angle of environmental groups and agencies, if the level of eco-centrism is too pronounced, though Model S has a greater profitability for both parties, a more significant welfare loss due to environmental hazard is perceived by the society. As a result, besides avoiding indulging in overproducing on new products, environmental groups and agencies should take emissions trading or taxation into consideration to stimulate remanufacturing operations.

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Reward-penalty mechanism for a two-period closed-loop supply chain

Cited by 64 publications

References 49 publications

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

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

Warranty Period Decision and Coordination in Closed-Loop Supply Chains Considering Remanufacturing and Consumer Behavior

A Sustainability Analysis on Retailer’s Sales Effort in A Closed-Loop Supply Chain

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