Optimal decisions and coordination of a supply chain in the hybrid recycling mode with traceability and fairness concern

Abstract

Considering the case of recycling competition between a manufacturer and a retailer, we construct game models under centralised and decentralised decision-making with or without fairness concern, respectively. By comparatively analysing the optimal decisions and profits under the three models, we design an improved two-part tariff contract to realise supply chain coordination. We have the following findings: First, in the supply chain with traceability, consumers’ preference for traceability and the impact of traceability on recycling are not only beneficial to the environment but also to each enterprise. Second, the retailer’s concern for fairness can harm the profits of the manufacturer and system. Moreover, the retailer’s disproportionate focus on fairness of the distribution of revenues hinders the introduction and development of the traceability system, leading to lower recycling volume and demand. Third, the traceability system is most efficient under centralised decision-making, attaining the highest traceability level, recycling volume, and system profit. The retail price and manufacturer’s recycling price are lower than those under decentralised decision-making. Our findings also suggest that improved two-part tariff contract can enhance the chain members’ performance. While fairness concern and fierce recycling competition hinder implementation of the coordination mechanism, and improved traceability facilitates the attainment of coordination.

KEYWORDS:

• Responsible consumption and production (SDG 12)
• closed-loop supply chain
• traceability
• hybrid recycling mode
• fairness concern
• two-part tariff contract

Disclosure statement

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

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article.

Authorship contribution statement

Qiuchen Wu: Software, Formal analysis, Writing – original draft. Yuyan Wang: Conceptualisation, Methodology, Funding acquisition. T.C.E. Cheng: Writing – review & editing. Yulin Sun: Writing-review & editing.

Notes

1 https://ewastemonitor.info/gtf-2022/

2 http://www.crra.com.cn/indexGeneralDetail/11758

3 https://www.ndrc.gov.cn/xwdt/ztzl/tdjdxf/202211/t20221107_1340935.html?state=123

4 https://www.wwsww.cn/hqfx/5482.html

5 https://twitter.com/everledgerio/status/1364902519189757956

6 http://www.gov.cn/zhengce/zhengceku/2020-05/19/content_5512912.htm

7 http://www.techweb.com.cn/it/2006-12-22/133713.shtml

8 https://blockchain.jd.com/

9 https://www.sohu.com/a/230422174_100035093

10 https://news.sohu.com/a/670224461_121411865

11 https://zhuanlan.zhihu.com/p/76682340

12 https://www.festo.com.cn/cn/zh/?fwacid=88edb015434b03e6

13 https://www.huawei.com/cn/sustainability

14 https://www.mi.com/xiaomicivi?masid=2872.0259

15 http://hx.suning.com/

16 https://blockchain.jd.com/solutions/zhuisu/

17 https://blockchain.jd.com/

Additional information

Funding

This work was supported in part by the National Natural Science Foundation of China under grant number 72371144, Self Cultivation Innovation Team Project of Jinan under grant number 202228075, and Shandong Taishan Scholar Project Special Project under grant number tsqn202211197.

Notes on contributors

Qiuchen Wu

Qiuchen Wu is a PhD candidate in the Management Science and Engineering, School of Business, Shandong Normal University. She received her M.S. degree in Logistics Engineering from Xidian University in 2022. Her current research interests include supply chain management, blockchain operations, and game theory. She has published article in Journal of Intelligent Manufacturing.

Yuyan Wang

Yuyan Wang is a professor at Shandong University of Finance and Economics and Shandong Normal University. She received her PhD in management from Nanjing University of Aeronautics and Astronautics. Her research interests include e-commerce, supply chain management, closed-loop supply chain, environmental regulation, game theory applications. Her research results have been published in European Journal of Operational Research, International Journal of Production Economics, International Journal of Production Research, et al. Her published papers have been cited 283 times in a single article and more than 3,000 times cumulatively.

T.C.E. Cheng

T.C. Edwin Cheng is Dean of PolyU Business School, Fung Yiu King – Wing Hang Bank Professor in Business Administration and Chair Professor of Management at The Hong Kong Polytechnic University. He obtained a B.Sc. [Eng] (first class honours) from the University of Hong Kong; an M.Sc. from the University of Birmingham, U.K.; and a Ph.D. and an Sc.D. from the University of Cambridge, U.K. Prof. Cheng’s research interests are in operations management and operations research. He has published over 900 SCI/SSCI papers and co-authored 15 books. According to Google Scholar, he has received over 50,000 citations and his h-index is 105.

Yulin Sun

Yulin Sun is a master’s degree student in the School of Engineering at the University of Sydney. He received his bachelor's degree from Shandong Jianzhu University, China, in 2022. His research interests include game theory and supply chain management.