Static and Dynamic Pricing Strategies in a Closed-Loop Supply Chain with Reference Quality Effects

Abstract

Abstract:Remanufacturing of returned products has been increasingly recognized in industries as an effective approach to face environmental responsibility, government regulations, and increased awareness of consumers. In this paper, we address a closed-loop supply chain (CLSC) in which the manufacturer produces the brand-new products, as well as the remanufactured goods while the retailer sells these products to customers. We consider several different scenarios: the manufacturer and the retailer adopt a steady-state price or a dynamic price with reference quality effects in a centralized case; either, neither or both the manufacturer and the retailer price dynamically with reference quality effects, respectively, in a decentralized model. We solve the problem with the retailer recycling the sold copies and deduce the optimal pricing strategies while the manufacturer in charge of recovering the used items in such a CLSC. The result shows that dynamic pricing strategies are much more profitable for the supply chain and its members when compared with pricing statically; the dynamic pricing strategies with time-varying quality characterized by reference quality are more suited to a long-term and cooperative closed-loop supply chain. Moreover, the optimal recycling fraction relies on the recovery cost coefficient and proves to be uniform despite adopting a dynamic price and quality in all distinct cases.

Myopic versus Farsighted Behaviors in a Low‐Carbon Supply Chain with Reference Emission Effects

“…In addition, a revenue sharing contract is introduced by the authors to mitigate the adverse impacts. Other recent literature related to the myopic behavior in the supply chain can be found in [16,20,26,36]. The difference between our paper and the above is that the emission reduction decision and pricing strategies are integrated, and the influence of the manufacturer's choice of myopic behavior on the emission-price relationship is also investigated here.…”

“…Another research by Liu et al [26] only focuses on the reference quality effects under a revenue sharing contract, and the findings display that the myopic behavior of the manufacturer results in a higher quality-price ratio which is beneficial to the consumers. Two other similar studies are [36,40], the former of which considers a closed-loop supply chain. Different from the price/quality reference in the above papers, we propose the concept of "reference emissions" to describe the dynamics in the supply chain.…”

“…It is the perceived amount of emissions that is formed over time utilizing the consumers' information, such as past emission levels, consumers' previous experience on this product, and so on. Following the method that has been used in [16,42] to depict the reference price effects and [26,36] to depict the reference quality effects, we employ an exponential smoothing process of this historical emissions to model the dynamics of reference emissions as follows:…”

“…Similar to previous literature [18,26,36] that describe the reference price/quality, we assume that the market demand is affected by reference emissions as well as market capacity, retail price, and emissions. The influence of reference emissions is related to the gap between actual emissions and reference emissions.…”

Impact of the Quality of Returned-Used Products on the Optimal Design of a Manufacturing/Remanufacturing System under Carbon Emissions Constraints

“…Although there are several works that consider the quality of returned products in the literature, there has not been any work that considers three quality levels such as those discussed above. Indeed, in the literature, we have found several works that consider the quality of returned-used products, but most of them have studied the impact of quality on the returns and remanufacturing costs [20][21][22]. The works that distinguish new and remanufacturing products and consider the quality of returned-used products are rare.…”