Cooperative mechanism on a three-echelon supply chain with remanufacturing outsourcing

Abstract

This paper studies the cooperative mechanism for a three-echelon supply chain with remanufacturing outsourcing comparing a supplier, a manufacturer, and a third-party remanufacturer, wherein we take the relative fairness concerns into consideration. The Stackelberg game theory is introduced to analyze the best values for the supply chain and each member. Nash bargaining solution is used as the relative fairness-concerned reference to discuss the corresponding optimal solutions of these models. By determining and comparing the equilibrium solutions across the five models, we discover that given the Nash bargaining fairness-concerned behavior, the system profits in the completely decentralized and three cooperative scenarios are lower than they are for products in the completely centralized decision model. The results show that in the centralized channel, the optimal profit and market demand in the three-echelon supply chain are maximized. Furthermore, it turns out that a cooperative mechanism can bring great benefits to its performance.

Keywords:

• supply chain
• cooperative mechanism
• fairness concerns
• Nash bargaining
• game theory

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the National Natural Science Foundation of P.R. China (71832008).