Optimisation of reverse supply chain with used-product collection effort under collector’s fairness concerns

Abstract

Fairness has been regarded as a vital role in developing and sustaining benign channel cooperation relationships. One can exhibit either distributional fairness when comparing with upstream/downstream parties or peer-induced fairness when comparing with competitors located at the same stage of the supply chain. This paper examines distributional fairness in a simple reverse supply chain (RSC) consisting of one collector and one remanufacturer, and then extends to the case of one remanufacturer and two collectors to investigate the case of peer-induced fairness. Adopting the game-theory analysis framework, we explore the optimal decisions of transfer price and collection effort in the fair-minded RSC and discuss the impacts of fairness concern. It is shown that under some condition channel coordination can be achieved by a simple contract of constant transfer price with distributional fairness concern from the collector, but this is not true when the collectors are peer-induced fair-minded.

Keywords:

• Reverse supply chain
• distributional fairness
• peer-induced fairness
• collection effort

Acknowledgments

We acknowledge the support of National Natural Science Foundation of China (NSFC), Research Fund No. 71772095 and No. 71725004, and the Fundamental Research Funds for the Central Universities 63192311. This study is also supported by the Asia Research Centre in Nankai University.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 The assumption of identical transfer price is without loss of generality due to the symmetry of the two collectors.

Additional information

Funding

This work was supported by National Natural Science Foundation of China: [Grant Number 71725004,71772095].