Optimal pricing decisions for a closed-loop supply chain with retail competition under fuzziness

Abstract

In this paper, we consider a pricing and remanufacturing decision problem in a fuzzy closed-loop supply chain with one manufacturer, two competitive retailers and one third-party collector. The fuzziness is associated with collecting costs, remanufacturing costs, and customer demands. Two game models are proposed to formulate the pricing and remanufacturing decision problem under different power structures. The channel members’ optimal decisions in fuzzy environment are derived from these models. Numerical experiments are also given to explore the impacts of the power structure and fuzziness on the performance of the chain. It is found that the manufacturer has more advantages in pursuing higher expected profit when it performs as a Stackelberg leader. The existence of dominance in the closed-loop supply chain may lead to poor performance of the total system: higher sales prices, lower collecting rate, and lower expected profit of the whole supply chain. The results also show that the fuzziness of costs may have positive influence on the recycling level.

Keywords:

• Supply chain management
• closed-loop supply chain
• fuzzy sets
• pricing competition
• remanufacturing

Notes

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 71371141) and the Fundamental Research Funds for the Central Universities.