Dual channel closed-loop supply chain coordination with a reward-driven remanufacturing policy

Abstract

This paper investigates a reward-driven policy, employed in a closed-loop supply chain (CLSC), for acquiring used products earmarked for remanufacture. Under the examined model, a single manufacturer sells products through a retailer as well as directly to end users in a forward supply chain. In the reverse supply chain, three different modes of collection are employed to capture used products for remanufacture: they are through a third party, directly by the manufacturer and from the retailer. Mathematical models for both non-cooperative and centralised scenarios are developed to characterise the pricing decisions and remanufacturing strategies that indicate individual and overall supply chain performance. Optimality of all the proposed models is examined with theory. To coordinate and achieve a win–win outcome for channel members, we proposed a three-way discount mechanism for the manufacturer. Extended numerical investigation provides insights on ways to manage an efficient reward-driven CLSC in a dual-channel environment.

Keywords:

• closed-loop supply chain
• remanufacturing
• dual-channel
• coordination

Acknowledgements

The authors gratefully acknowledge the editor and the anonymous reviewers for their constructive comments and suggestions that were instrumental in improving this paper.

Notes

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the BK21 Plus Program (Center for Sustainable and Innovative Industrial Systems, Department of Industrial Engineering, Seoul National University) funded by the Ministry of Education, Korea [No. 21A20130012638].