Pricing and remanufacturing decisions in two competing supply chains

Abstract

This paper considers the pricing and remanufacturing decisions in a duopoly market with two competing supply chains, which compete at both manufacturer and retailer levels. There are one manufacturer and one retailer in each supply chain, one manufacturer produces the new product directly from raw material, while the other manufacturer has incorporated a remanufacturing process for used product into the original production system. Based on different industry organisation structures and the chain members’ competing forms, five game decision models are established to explore the chain members’ optimal strategies on price and/or remanufacturing, and the corresponding equilibrium solutions are obtained. Finally, we carry out the sensitivity analysis through numerical studies of some key parameters for examining their influences on the pricing decisions and chain members’ maximum profits. On the basis of comparison and analysis, some managerial insights are derived.

Keywords:

• pricing
• remanufacturing
• game theory
• competing supply chains

Acknowledgements

The authors sincerely thank the editor and the anonymous reviewers for their many helpful suggestions and insightful comments, which have significantly improved the content and presentation of this paper. We gratefully acknowledge the support of (i) National Natural Science Foundation of China (NSFC), Research Fund Nos. 71371186 and 71001106, for J. Wei; (ii) The Major Program of the National Social Science Fund of China (Grant no.13&ZD147), and National Natural Science Foundation of China, No. 71301116, for J. Zhao.