Quality, buyback and technology licensing considerations in a two-period manufacturing–remanufacturing system: a closed-loop and sustainable supply chain

Abstract

Technology licensing affects both welfare and financial concepts. In the literature, while the effects of different licensing mechanisms on the decision variables of a manufacturing system are thoroughly investigated, relationships between licensing scenarios and production quantities on a closed-loop supply chain (CLSC) have not been examined completely. To fill out this gap we study three most common types of licensing mechanisms; fixed-fee, royalty cost and two-part tariff licensing scenarios with the quality level of collected second-hand items in a two-period CLSC. The proposed model consists of one manufacturer and one remanufacturer who is permitted to engage in the remanufacturing process just in the second period of the planning horizon. Our main assumption is that a constant demand is to be satisfied within a two-period CLSC. Consumer demand is satisfied in the first period by manufacturing the raw materials and in the second period, both manufacturing and remanufacturing processes are possible due to the demand quantities and quality level of the collected second-hand items. A numerical example and sensitivity analysis are presented along with analytical conclusions to provide insights into the performance of the CLSC parties in each licensing scenario. The findings prove the applicability of the proposed model.

KEYWORDS:

• Quality level
• competition
• fixed-fee licensing
• royalty cost licensing
• two-part tariff
• Cournot model

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 In this text, for the sake of convenience, the manufacturer is assumed to be a female, while the remanufacturer is a male.

Additional information

Notes on contributors

Ali Sabbaghnia

Ali Sabbaghnia received the B.Sc. degree in industrial engineering from the Iran University of Science and Technology, and the M.Sc. degree in industrial engineering from the University of Tehran. Currently, he is a senior PhD student in Industrial Engineering. His research interests include supply chain management and supply chain coordination under uncertainty.

Ata Allah Taleizadeh

Ata Allah Taleizadeh received the B.Sc. degree in industrial engineering from the Islamic Azad University of Qazvin, and the M.Sc. and PhD degrees from the Iran University of Science and Technology, both in industrial engineering. He is currently an Associate Professor of Industrial Engineering, at University of Tehran. He serves as an Editor/Associated Editor/Editorial Board Member for a number of international journals and has published extensively in reputable and leading journals such as European Journal of Operational Research, OMEGA; International Journal of Management Sciences, IEEE Transactions On Systems, Man, and Cybernetics: Systems, International Journal of Production Economics, Annals of Operation Researches, Service Sciences, Transportation Research: Part E, etc. His research area includes Pricing and Revenue Optimization, Inventory Control, and Supply Chain Management.