Collection decisions and coordination in a closed-loop supply chain under recovery price and service competition

Dingzhong Feng; Xiaofeng Zhang; Ye Zhang

doi:10.3934/jimo.2021117

Article Contents

2022, Volume 18, Issue 5: 3365-3392. Doi: 10.3934/jimo.2021117

This issue Previous Article Approximation algorithm with constant ratio for stochastic prize-collecting Steiner tree problem Next Article The optimization of a multi-period multi-product closed-loop supply chain network with cross-docking delivery strategy

Collection decisions and coordination in a closed-loop supply chain under recovery price and service competition

College of Mechanical Engineering, Zhejiang University of Technology, Hangzhou, 310023, China

^* Corresponding author: zhangxiaofeng@zjut.edu.cn (Xiaofeng Zhang)
^* Corresponding author: zhangxiaofeng@zjut.edu.cn (Xiaofeng Zhang)

Received: November 30, 2020

Revised: March 31, 2021

Early access: July 2021

Published: November 2022

The first author is supported by the Natural Science Foundation of Zhejiang Province, China (No. LY18G010019) and Zhejiang Province Public Welfare Technology Application Research Project (No. 2015C33014)

Abstract Full Text(HTML) Figure(8) / Table(4) Related Papers Cited by

Abstract

With the increasing growth of consumers' request for recovery channels, in addition to collecting price, the collecting service has gradually become a competitive point for collectors to collect used products. Focusing on a closed-loop supply chain (CLSC) with recovery competition (on collecting price and collecting service) and distinguishing collecting quality, we propose two models (decentralized and centralized models) to study the collection strategies and profits of the CLSC. Moreover, we analyze the impact of the collecting competition and quality on the CLSC. Finally, a revenue-cost sharing contract (RCSC) is introduced to coordinate the supply chain. And a numerical example is illustrated to verify the contract's efficiency. It is found that the collected quantities and profits of the CLSC members are positively correlated with the remanufacturable ratio. The collecting competition dampens consumers' enthusiasm for recycling, which is not conducive to collectors to carry out collecting activity, resulting in the reduction of the CLSC's profit. The collectors appropriately improving collecting prices and service levels can increase the collected quantities, but to cope with the increasing competition, increasing collecting price is the main means for collectors to attract consumers to recycle. In addition, the designed RCSC can effectively improve the CLSC's efficiency and increase the profits of each party.

Keywords:

Mathematics Subject Classification: Primary: 90B06; Secondary: 91A10, 91A25.

Citation:

FullText(HTML)

Figure 1. Decentralized model (DM)

Download: Full-size image PowerPoint slide

Figure 2. Centralized model (CM)

Download: Full-size image PowerPoint slide

Figure 3. Influence of $ \rho $ on the CLSC members' optimal collection decisions and profits

Download: Full-size image PowerPoint slide

Figure 4. Influence of $ n_b $ on the CLSC members' optimal collection decisions and profits

Download: Full-size image PowerPoint slide

Figure 5. Influence of $ n_S $ on the CLSC members' optimal collection decisions and profits

Download: Full-size image PowerPoint slide

Figure 6. Influence of $ m_b $ on the CLSC members' optimal collected quantities and profits

Download: Full-size image PowerPoint slide

Figure 7. Influence of $ m_S $ on the CLSC members' optimal collected quantities and profits

Download: Full-size image PowerPoint slide

Figure 8. Influence of sharing ratio $ \theta $ on chain members' profits

Download: Full-size image PowerPoint slide

Table 1. Comparison between our research and related literatures

References	Collecting channel		Pricing on		Service on		Collecting competition on		Collecting quality	Coordination mechanism
References	Single channel	dual-channel	Sales	Collection	Sales	Collection	Price	Service	Collecting quality	Coordination mechanism
Ferrer and Swaminathan (2010)	√		√
Wei et al. (2015)	√		√
Gao et al. (2016)	√		√							LPSS
Gan et al. (2017)	√		√
P. He et al. (2019)	√		√
Modak et al. (2019)	√		√							TPTC
Wen et al. (2020)	√		√
Savaskan et al. (2004)	√		√							WPC
Hong and Yeh (2012)	√		√
Atasu et al. (2013)	√		√
Shi et al. (2015)	√		√
Liu and Xiao (2020)	√		√
Huang et al. (2013)		√	√	√
L. Liu et al. (2017)		√	√	√
Liu et al. (2016)		√		√			√		√
Wang et al. (2018)		√	√	√			√			RPM
Q. He et al. (2019)		√	√			√		√		TPTC, AM
Wang et al. (2019)		√	√	√			√
Wu (2012)			√		√
Hong et al. (2015)	√		√		√					CA, TPTC
Zhang et al. (2015)	√		√		√
Jena and Sarmah (2016)	√		√		√					QDC
Kong et al. (2017)	√		√		√
Zhao et al. (2019)	√		√		√
Li et al. (2019)	√		√		√
Huang et al. (2020)	√		√		√
De Giovanni (2014)	√		√							WPC, RRSC
Panda et al. (2017)	√		√							RSC
Liang et al. (2017)	√		√		√					RSC
Xie et al. (2017)	√		√		√	√				RSC
Xie et al. (2018)	√		√	√	√	√				RSC, RCSC
Zheng et al. (2019)	√		√							SVM, NSM, ESM
Wang et al. (2020)		√	√	√			√			RSC, TPTC
This research		√	√	√		√	√	√	√	RCSC
LPPS: Low Price Promotion Strategy, TPTC: Two Part Tariff Contract, WPC: Wholesale Price Contract, RPM: Reward-Penalty Mechanism, CA: Cooperative advertising, QDC: Quantity Discount Contract, RSC: Revenue Sharing Contract, RRSC: Reverse Revenue Sharing Contract, RCSC: Revenue and Cost Sharing Contract, AM: Authorization Mechanism, SVM: Shapley Value Mechanism, NSM: Nucleolus Solution Mechanism, ESM: Equal Satisfaction Mechanism.

| Show Table

DownLoad: CSV

Table 2. Notations

Symbol	Description
Parameters
$ c_m $	Production costs via new raw materials
$ c_r $	Production costs via collected products
$ \Delta $	The cost-savings provided by remanufacturing. Note that $ \Delta={c_m}-{c_r} $
$ \rho $	Remanufacturable ratio of the collected products
$ r $	The revenue by disassembling collected products
$ q_R $	Quantity of used product collected by the retailer
$ q_T $	Quantity of used product collected by the third-party collector
$ m_b $	Collecting price sensitivity coefficient
$ n_b $	Collecting price competition coefficient
$ m_S $	Collecting service sensitivity coefficient
$ n_S $	Collecting service competition coefficient
$ A $	Cost index of reverse channel investment
$ d $	Product demand. Note that $ d=\alpha-\ \beta p $
Decision variables
$ p $	Selling price of products
$ w $	Wholesale price
$ B $	The transfer price that the manufacturer pays to the retailer or the third-party collector
$ S_R $	The retailer's collecting service level
$ S_T $	The third-party collector's collecting service level
$ b_R $	Collecting price to market given by the retailer
$ b_T $	Collecting price to market given by the third-party collector
Other notations
$ M $	The manufacturer
$ R $	The retailer
$ T $	The third-party collector
$ \pi_C $	The total profit of the supply chain
$ \pi_M $	The profit of the manufacturer
$ \pi_R $	The profit of the retailer
$ \pi_T $	The profit of the third-party collector
CM	The centralized model
DM	The decentralized model
Note that $ p>w>{c_m}>{c_r}>0 $, $ \Delta>B>{b_i}>0 $, $ {S_i}>0 $, $ i=\{R,T\} $.

| Show Table

DownLoad: CSV

Table 3. The comparisons between the optimal collection decisions and profits of the two models

	$ p $	$ b_R $	$ b_T $	$ S_R $	$ S_T $	$ q_R $	$ q_T $	$ q_C $	$ \pi_C $
DM	39.5	0.76	0.76	0.38	0.38	9.44	9.44	18.89	707.17
CM	29	1.35	1.35	0.61	0.61	16.36	16.36	32.72	937.63

| Show Table

DownLoad: CSV

Table 4. The comparison between the profits of the CLSC with coordination and that without coordination

Profit	$ \pi_T $	$ \pi_R $	$ \pi_M $	$ \pi $	Supply chain efficiency
Without coordination	6.78	227.28	473.11	707.17	75.42%
With coordination	8.86	367.21	561.44	937.51	99.99%

| Show Table

DownLoad: CSV

Related Papers

Cited by

References

[1]	A. Atasu, L. B. Toktay and L. N. Van Wassenhove, How collection cost structure drives a manufacturer's reverse channel choice, Prod. Oper. Manag., 22 (2013), 1089-1102. doi: 10.1111/j.1937-5956.2012.01426.x.
[2]	P. De Giovanni, Environmental collaboration in a closed-loop supply chain with a reverse revenue sharing contract, Ann. Oper. Res., 220 (2014), 135-157. doi: 10.1007/s10479-011-0912-5.
[3]	G. Ferrer and J. M. Swaminathan, Managing new and remanufactured products, Manage. Sci., 52 (2006). doi: 10.1287/mnsc.1050.0465.
[4]	G. Ferrer and J. M. Swaminathan, Managing new and differentiated remanufactured products, Eur. J. Oper. Res., 203 (2010), 370-379. doi: 10.1016/j.ejor.2009.08.007.
[5]	S.-S. Gan, I. N. Pujawan, Su parno and B. Widodo, Pricing decision for new and remanufactured product in a closed-loop supply chain with separate sales-channel, Int. J. Prod. Econ., 190 (2017), 120-132. doi: 10.1016/j.ijpe.2016.08.016.
[6]	J. Gao, H. Han, L. Hou and H. Wang, Pricing and effort decisions in a closed-loop supply chain under different channel power structures, J. Clean. Prod., 112 (2016), 2043-2057. doi: 10.1016/j.jclepro.2015.01.066.
[7]	A. Goli, H. K. Zare, R. Tavakkoli-Moghaddam and A. Sadegheih, Multiobjective fuzzy mathematical model for a financially constrained closed-loop supply chain with labor employment, Comput. Intell., 36 (2020), 4-34. doi: 10.1111/coin.12228.
[8]	K. Govindan, H. Soleimani and D. Kannan, Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future, Eur. J. Oper. Res., 240 (2015), 603-626. doi: 10.1016/j.ejor.2014.07.012.
[9]	Q. Gu, J. Ji and T. Gao, Pricing management for a closed-loop supply chain, J. Revenue Pricing Manag., 7 (2008), 45-60. doi: 10.1057/palgrave.rpm.5160122.
[10]	P. He, Y. He and H. Xu, Channel structure and pricing in a dual-channel closed-loop supply chain with government subsidy, Int. J. Prod. Econ., 213 (2019), 108-123. doi: 10.1016/j.ijpe.2019.03.013.
[11]	Q. He, N. Wang, Z. Yang, Z. He and B. Jiang, Competitive collection under channel inconvenience in closed-loop supply chain, Eur. J. Oper. Res., 275 (2019), 155-166. doi: 10.1016/j.ejor.2018.11.034.
[12]	I.-H. Hong and J.-S. Yeh, Modeling closed-loop supply chains in the electronics industry: A retailer collection application, Transp. Res. Part E: Logist. Transp. Rev., 48 (2012), 817-829. doi: 10.1016/j.tre.2012.01.006.
[13]	X. Hong, L. Xu, P. Du and W. Wang, Joint advertising, pricing and collection decisions in a closed-loop supply chain, Int. J. Prod. Econ., 167 (2015), 12-22. doi: 10.1016/j.ijpe.2015.05.001.
[14]	M. Huang, M. Song, L. H. Lee and W. K. Ching, Analysis for strategy of closed-loop supply chain with dual recycling channel, Int. J. Prod. Econ., 144 (2013), 510-520. doi: 10.1016/j.ijpe.2013.04.002.
[15]	Y. Huang, B. Zheng and Z. Wang, Advertisement vs. Monetary Subsidy: Which is Better for Remanufacturing?, J. Syst. Sci. Syst. Eng., 29 (2020), 344-359. doi: 10.1007/s11518-019-5447-3.
[16]	S. K. Jena and S. P. Sarmah, Price and service co-opetiton under uncertain demand and condition of used items in a remanufacturing system, Int. J. Prod. Econ., 173 (2016), 1-21. doi: 10.1016/j.ijpe.2015.11.019.
[17]	M. Klausner and C. T. Hendrickson, Reverse-logistics strategy for product take-back, INFORMS Journal on Applied Analytics, 30 (2000), 156-165. doi: 10.1287/inte.30.3.156.11657.
[18]	L. Kong, Z. Liu, Y. Pan, J. Xie and G. Yang, Pricing and service decision of dual-channel operations in an O2O closed-loop supply chain, Ind. Manag. Data Syst., 117 (2017), 1567-1588. doi: 10.1108/IMDS-12-2016-0544.
[19]	K. Li, Y. Li, Q. Gu and A. Ingersoll, Joint effects of remanufacturing channel design and after-sales service pricing: An analytical study, Int. J. Prod. Res., 57 (2019), 1066-1081. doi: 10.1080/00207543.2018.1500722.
[20]	L. Liang, J. Xie, L. Liu and Y. Xia, Revenue sharing contract coordination of wind turbine order policy and aftermarket service based on joint effort, Ind. Manag. Data Syst., 117 (2017), 320-345. doi: 10.1108/IMDS-03-2016-0088.
[21]	H. Liu, M. Lei, H. Deng, G. Keong Leong and T. Huang, A dual channel, quality-based price competition model for the WEEE recycling market with government subsidy, Omega, 59 (2016), 290-302. doi: 10.1016/j.omega.2015.07.002.
[22]	L. Liu, Z. Wang, L. Xu, X. Hong and K. Govindan, Collection effort and reverse channel choices in a closed-loop supply chain, J. Clean. Prod., 144 (2017), 492-500. doi: 10.1016/j.jclepro.2016.12.126.
[23]	Y. Liu and T. Xiao, Pricing and collection rate decisions and reverse channel choice in a socially responsible supply chain with green consumers, IEEE Trans. Eng. Manag., 67 (2020), 483-495. doi: 10.1109/TEM.2018.2887118.
[24]	Z. Liu, J. Tang, B. -yi Li and Z. Wang, Trade-off between remanufacturing and recycling of WEEE and the environmental implication under the Chinese Fund Policy, J. Clean. Prod., 167 (2017), 97-109. doi: 10.1016/j.jclepro.2017.08.137.
[25]	R. Lotfi, Z. Yadegari, S. H. Hosseini, A. H. Khameneh, E. B. Tirkolaee and G.-W. Weber, A robust time-cost-quality-energy-environment trade-off with resource-constrained in project management: A case study for a bridge construction project, J. Ind. Manag. Optim., 13 (2020). doi: 10.3934/jimo.2020158.
[26]	D. Mangun and D. L. Thurston, Incorporating component reuse, remanufacture, and recycle into product portfolio design, IEEE Trans. Eng. Manag., 49 (2002), 479-490. doi: 10.1109/TEM.2002.807292.
[27]	N. M. Modak, N. Kazemi and L. E. Cárdenas-Barrón, Investigating structure of a two-echelon closed-loop supply chain using social work donation as a Corporate Social Responsibility practice, Int. J. Prod. Econ., 207 (2019), 19-33. doi: 10.1016/j.ijpe.2018.10.009.
[28]	J. Nie, Z. Huang, Y. Zhao and Y. Shi, Collective recycling responsibility in closed-loop fashion supply chains with a third party: Financial sharing or physical sharing?, Math. Probl. Eng., 2013 (2013), Article ID 176130. doi: 10.1155/2013/176130.
[29]	I. C. Nnorom and O. Osibanjo, Overview of prospects in adopting remanufacturing of end-of-life electronic products in the developing countries, Int. J. Innov. Manag. Technol., 1 (2010), 328.
[30]	S. Panda, N. M. Modak and L. E. Cárdenas-Barrón, Coordinating a socially responsible closed-loop supply chain with product recycling, Int. J. Prod. Econ., 188 (2017), 11-21. doi: 10.1016/j.ijpe.2017.03.010.
[31]	R. C. Savaskan, S. Bhattacharya and L. N. Van Wassenhove, Closed-loop supply chain models with product remanufacturing, Manage. Sci., 50 (2004). doi: 10.1287/mnsc.1030.0186.
[32]	Y. Shi, J. Nie, T. Qu, L.-K. Chu and D. Sculli, Choosing reverse channels under collection responsibility sharing in a closed-loop supply chain with re-manufacturing, J. Intell. Manuf., 26 (2015), 387-402. doi: 10.1007/s10845-013-0797-z.
[33]	T. P. Wagner, Compact fluorescent lights and the impact of convenience and knowledge on household recycling rates, Waste Manag., 31 (2011), 1300-1306. doi: 10.1016/j.wasman.2011.01.017.
[34]	N. Wang, Q. He and B. Jiang, Hybrid closed-loop supply chains with competition in recycling and product markets, Int. J. Prod. Econ., 217 (2019), 246-258. doi: 10.1016/j.ijpe.2018.01.002.
[35]	N. Wang, Y. Song, Q. He and T. Jia, Competitive dual-collecting regarding consumer behavior and coordination in closed-loop supply chain, Comput. Ind. Eng., 144 (2020). doi: 10.1016/j.cie.2020.106481.
[36]	W. Wang, S. Zhou, M. Zhang, H. Sun and L. He, A closed-loop supply chain with competitive dual collection channel under asymmetric information and reward-penalty mechanism, Sustain., 10 (2018). doi: 10.3390/su10072131.
[37]	J. Wei, K. Govindan, Y. Li and J. Zhao, Pricing and collecting decisions in a closed-loop supply chain with symmetric and asymmetric information, Comput. Oper. Res., 54 (2015), 257-265. doi: 10.1016/j.cor.2013.11.021.
[38]	D. Wen, T. Xiao and M. Dastani, Pricing and collection rate decisions in a closed-loop supply chain considering consumers' environmental responsibility, J. Clean. Prod., 262 (2020). doi: 10.1016/j.jclepro.2020.121272.
[39]	C.-H. Wu, Price and service competition between new and remanufactured products in a two-echelon supply chain, Int. J. Prod. Econ., 140 (2012), 496-507. doi: 10.1016/j.ijpe.2012.06.034.
[40]	J. Xie, L. Liang, L. Liu and P. Ieromonachou, Coordination contracts of dual-channel with cooperation advertising in closed-loop supply chains, Int. J. Prod. Econ., 183 (2017), 528-538. doi: 10.1016/j.ijpe.2016.07.026.
[41]	J. Xie, W. Zhang, L. Liang, Y. Xia, J. Yin and G. Yang, The revenue and cost sharing contract of pricing and servicing policies in a dual-channel closed-loop supply chain, J. Clean. Prod., 191 (2018), 361-383. doi: 10.1016/j.jclepro.2018.04.223.
[42]	Y. Xiong, Q. Zhao and Y. Zhou, Manufacturer-remanufacturing vs supplier-remanufacturing in a closed-loop supply chain, Int. J. Prod. Econ., 176 (2016), 21-28. doi: 10.1016/j.ijpe.2016.03.001.
[43]	C. Xu, B. Li, Y. Lan and Y. Tang, A closed-loop supply chain problem with retailing and recycling competition, Abstr. Appl. Anal., 2014 (2014), Article ID 509825. doi: 10.1155/2014/509825.
[44]	A. Yenipazarli, Managing new and remanufactured products to mitigate environmental damage under emissions regulation, Eur. J. Oper. Res., 249 (2016), 117-130. doi: 10.1016/j.ejor.2015.08.020.
[45]	C.-T. Zhang and M.-L. Ren, Closed-loop supply chain coordination strategy for the remanufacture of patented products under competitive demand, Appl. Math. Model., 40 (2016), 6243-6255. doi: 10.1016/j.apm.2016.02.006.
[46]	Z.-Z. Zhang, Z.-J. Wang and L.-W. Liu, Retail services and pricing decisions in a closed-loop supply chain with remanufacturing, Sustain., 7 (2015), 2373-2396. doi: 10.3390/su7032373.
[47]	J. Zhao, C. Wang and L. Xu, Decision for pricing, service, and recycling of closed-loop supply chains considering different remanufacturing roles and technology authorizations, Comput. Ind. Eng., 132 (2019), 59-73. doi: 10.1016/j.cie.2019.04.019.
[48]	X.-X. Zheng, Z. Liu, K. W. Li, J. Huang and J. Chen, Cooperative game approaches to coordinating a three-echelon closed-loop supply chain with fairness concerns, Int. J. Prod. Econ., 212 (2019), 92-110. doi: 10.1016/j.ijpe.2019.01.011.