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Pricing and collection decisions of a closed-loop supply chain with fuzzy demand

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posted on 2022-02-02, 09:44 authored by Wenjie Liu, Wei Liu, Ningning Shen, Zhitao Xu, Naiming Xie, Jian Chen, Huiyu Zhou
This paper proposes one centralized and three decentralized models (manufacturer-dominated, retailer-dominated, and collector-dominated) for a closed-loop supply chain with fuzzy demand and different quality levels for second-hand products. Optimal pricing, collection ratios, and profit allocations for each model are determined through a combination of a Stackelberg game and a fuzzy cut-set method. The model is also successfully applied to a case of automobile starter. Results indicate that the centralized model can gain the highest expected overall profit if the cost coefficient of collection effort and the difference between unit mean transferred price and unit classification expense of recycled product are greater than the corresponding thresholds. For the three decentralized models, optimal prices of new products rise with the ratio of used products of different quality levels. However, the optimal prices of new and remanufactured products and the optimal collection ratios drop with the cost coefficient of the collection effort. Additionally, a counterintuitive result is identified. The optimal collection ratio reaches a maximum in the manufacturer-dominated model rather than the collector-dominated model. Two important management implications are derived from the results: First, all supply chain members should build strategic partnerships following a centralized model to maximize the expected overall profit; Second, the manufacturers should strive for raising the remanufacturing rate of recycled products to gain a maximum expected overall profit and a satisfactory collection ratio of recycled products.

Funding

National Natural Science Fund of China (71871117, 72171116, 71702073, 52075259)

Royal Society of UK (IEC\NSFC\201348)

Humanities and Social Science Foundation of Ministry of Education of China (18YJA630066)

Aeronautical Science Fund of China (2017ZG52080)

Key Project of University Social Sciences Foundation of Jiangsu Province of China (2017ZDIXM083)

History

Citation

International Journal of Production Economics Volume 245, March 2022, 108409

Author affiliation

School of Computing and Mathematical Sciences, University of Leicester

Version

  • AM (Accepted Manuscript)

Published in

International Journal of Production Economics

Volume

245

Pagination

108409

Publisher

Elsevier BV

issn

0925-5273

Acceptance date

2022-01-04

Copyright date

2022

Available date

2023-07-07

Language

en

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