Managing channel profit and total surplus in a closed-loop supply chain network

Abstract

Today’s government is interested in the product recovery programme in order to encourage sustainability. The research develops four closed-loop supply chain models by considering different scenarios for the governmental subsidies and fees under price-sensitive demand. Analytical results suggest that the government should provide subsidies to the manufacturer to maximise channel profit and total surplus. Higher subsidies advocates a manufacturer’s intention to lean towards remanufacturing activities under given manufacturing and consumption fees scenarios. The sensitivity analysis reveals that the total surplus and channel profit increases as subsidies increase in all closed-loop supply chain models.

Keywords:

• Government subsidies
• fees
• closed-loop supply chain
• remanufacturing
• mathematical modelling