The Presence of a Powerful Retailer on Dynamic Collecting Closed-Loop Supply Chain From a Sustainable Innovation Perspective

Abstract

In this study, the presence of a powerful retailer in the dynamic collecting closed-loop supply chain is considered. The supply chain consists of a manufacturer and a retailer who is responsible for the used-product collection. Specifically, we have considered three settings, that is, no channel leader, the manufacturer as the leader and the retailer as the leader. The steady equilibrium and the optimal control strategies are derived in different channel power structures utilizing the open-loop control strategy method. By the comparison of three models, we found that the system with manufacturer leading results in the lowest return rate in the three models. If the transfer price of the used-product is low, the presence of a power retailer would result in a higher return rate, which is beneficial for decreasing the market price for the consumers. When the transfer price is quite high, the scenario with no channel leader in the supply chain would result in a higher return rate. However, the numerical comparison results of the profit rate of the supply chain members indicate that both manufacturer and retailer prefer themselves to be the channel leader rather than the other channel member as the leader. This means that although the presence of a power retailer is beneficial for the collecting efficiency, it is not enough to increase the profit of the supply chain members. The manufacturer should transfer all unit cost savings to the retailer in the scenario of manufacturer leading and no one leading.

Decision-Making and Performance Analysis of Closed-Loop Supply Chain under Different Recycling Modes and Channel Power Structures

“…In recent years, the presence of large retailers such as Wal-mart and Carrefour has increased the importance of the retailers in the supply chain and changed the channel power structure of the supply chain (Mi et al [50]). Additionally, with the prevalence of collectors and their leading roles, collector-led CLSCs are increasingly popular (Karakayali et al [51]).…”

“…They conclude that the centralized model outperforms the decentralized scenarios in terms of the system profit. Using the open-loop control strategy method, Jackson et al [50] explore the steady equilibrium and the optimal control strategies in three settings: no channel leader, the manufacturer as the leader and the retailer as the leader. By the numerical comparison of the profit rate of the supply chain members, they find that both manufacturer and retailer have an incentive to play the channel leader's role.…”

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

“…Nevertheless, other types of games are identified in the framework of the Stackelberg model. We can refer to [6,89,90], who worked to formulate CLSCs based on differential games. These games are solved by the Hamilton-Jacobi-Bellman equation method [91,92].…”

“…We found that almost three-quarters of the investigated CLSCs studied the models under the leadership of the manufacturers. Some works found a disadvantage by considering the manufacturer as a leader, such as the lowest return rate [90] or a higher retail price and a lower collection effort [121]. However, others showed advantages from the perspective of the remanufacturing process and consumers' welfare [58].…”

“…It may intuitively become an incentive to reduce the selling price to enhance market demand and profit [273]. Notably, it has been proven, in some cases, that retailer-led models lead to better results for the total CLSC with price and effort dependent demand [105] and also lead to a higher return rate, which is beneficial for decreasing the market price for the consumers [90].…”