An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management
Abstract
:1. Introduction
- (1)
- Under the condition of horizontal fairness, the offline retailers have extended the traditional dual-channel supply chain to the dual-channel closed-loop supply chain of recycling and remanufacturing based on the manufacturer’s direct recycling model and the entrusted third-party recycling model, respectively.
- (2)
- The impact of horizontal fairness concern behavior is introduced in the pricing strategies and utility of decision makers under different recycling models, which has enriched previous studies that have only considered vertical fairness concerns among the various entities in the supply chain.
- (3)
- In view of the impact of horizontal fairness concerns on the pricing and utility of decision makers, an improved three-way revenue sharing contract is proposed to achieve optimal coordination of the entire closed-loop supply chain when there is horizontal fairness concern among retailers.
2. Literature Review
3. Dual-Channel Closed-Loop Supply Chain Problem Description and Basic Assumptions
- (1)
- Assuming that the unit cost of the new product is and the unit cost of the remanufactured product is , the production cost of the new product is higher than that of the remanufactured product, that is, , and represents the unit cost of producing the remanufactured product.
- (2)
- Under normal circumstances, according to the research of Huang et al. [19], the online sales cost is lower than the offline sales. Assume that the offline retailer unit sales cost is and the online retailer sales cost is zero.
- (3)
- Referring to the assumptions of Savaskan et al. [7], when waste products are passed back, there is no difference in quality and function between remanufacturing and new products, and consumers have the same level of acceptance and manufacturers have no price discrimination for independent online retailers and offline retailers, and the wholesale price is .
- (4)
- Assume that the market recovery rate satisfies , and all recovered products are used in the remanufacturing process, according to the research of Savaskan et al. [7]. The average unit production cost of the manufacturer can be expressed as: . The recycling cost of waste products is , where is the scale parameter . It can be seen that the higher the recovery rate, the higher the recovery cost, and when the third party recycles, the manufacturer’s transfer payment cost is .
- (5)
- Considering the online and offline dual-channel competition sales model, refer to Qiu-Xiang et al. [25], in which it is assumed that the demand function for offline sales is , where is the potential market capacity, and is the degree of substitution for online and offline sales . Moreover, the two retailers wholesale goods to the manufacturer according to market demand, and the inventory cost is zero.
- (6)
- Decision makers are not completely rational, and they will have a fair preference in the face of uneven distribution of profits.
4. Pricing Strategies for Fair and Neutral Decision Makers
4.1. Pricing Strategy in the Manufacturer’s Direct Recycling Mode
4.2. Pricing Strategy in Third-Party Recycling Mode
- (1)
- The manufacturer determines the wholesale price and the transfer payment price ;
- (2)
- The two retailers determine the retail prices and , respectively;
- (3)
- The third party determines the recovery rate .
5. Pricing Strategies of Decision Makers under the Horizontal Fair Concern Behavior of Offline Retailers
5.1. Pricing Strategy Based on Manufacturer’s Direct Recycling Mode under Horizontal Fair Concerns
5.2. Pricing Strategy Based on Third-Party Recycling Mode under Horizontal Fairness Concerns
6. Supply Chain Coordination Based on the Manufacturer’s Direct Recycling Mode under Horizontal Fair Concern Behavior
7. Numerical Simulations
7.1. The Relationship between Retail Prices and , and the Horizontal Fairness Concern
7.2. The Relationship between the Recovery Rate , the Wholesale Price, and the Horizontal Fairness Concern Factor Determined by the Manufacturer
7.3. The Relationship between Offline Retailers Utility, Online Retailers Utility, and Horizontal Fairness Concerns
7.4. The Relationship between the Utility of the Manufacturer and the Utility of the Entire Supply Chain System and the Horizontal Fairness Concern
7.5. The Relationship between the Revenue Sharing Ratios of Offline and Online Retailers and , and the Horizontal Fairness Concern Coefficient
8. Conclusions
Author Contributions
Funding
Conflicts of Interest
Appendix A
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Parameter | Value | |
---|---|---|
1 | 100 | |
2 | 100 | |
3 | 50 | |
4 | 2000 | |
5 | 10 | |
6 | 0.5 |
Recycling Method | Direct Recycling | Third-Party Recycling |
---|---|---|
Wholesale Prices | 135.0 | 142.0 |
Transfer payment price | - | 25 |
Recovery rate | 0.50 | 0.22 |
Offline retail price | 162.0 | 166.7 |
Online retail price | 158.0 | 162.7 |
Offline retailer profit | 289.0 | 215.3 |
Online retailer profit | 529.0 | 427.4 |
Third-party profit | - | 97.6 |
Manufacturer profit | 1900.0 | 1679.1 |
Supply chain system profit | 2718.0 | 2419.5 |
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Arshad, M.; Khalid, Q.S.; Lloret, J.; Leon, A. An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management. Sustainability 2018, 10, 3433. https://doi.org/10.3390/su10103433
Arshad M, Khalid QS, Lloret J, Leon A. An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management. Sustainability. 2018; 10(10):3433. https://doi.org/10.3390/su10103433
Chicago/Turabian StyleArshad, Muhammad, Qazi Salman Khalid, Jaime Lloret, and Antonio Leon. 2018. "An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management" Sustainability 10, no. 10: 3433. https://doi.org/10.3390/su10103433