Study On The Pricing Model Of Closed-loop Supply Chain With One-way Substitution And Capacity Constraint

Remanufacturing closed-loop supply has gradually become an important tool for enterprises to engage in market competition and undertake social responsibilities because of its both economic and environmental benefits. In many industries, new and remanufactured products face different markets, and capacity constraint for manufacturers is usually the case. Such circumstances provide great necessity to research the pricing and coordination problems of closed-loop supply chain under product substitution and capacity constraint.It is engaged to solve the following questions:what would be the supply chain member's optimal pricing decisions in the centralized model and decentralized model when the substitution strategy exists or not? What are the differences when the supply chain model is or is not centralized, with or without substitution strategy? How do the pricing decisions affect their profit conditions? What are the roles of capacity constraint and used products collecting volume constraint in the above decisions? Is all the supply chain members' performance improved under product substitution? If not. how to coordinate?Based on the model analysis and numerical experiment, the following conclusion are arrived:(1) all prices of centralized models are lower than those of decentralized models, while all profits of centralized models are higher than those of decentralized ones; (2)under product substitution, supply chain's profit is improved in centralized model. In Decentralized model, the manufacturer's profit is lower, while the retailer and whole supply chain's profit are higher; (3) when capacity is sufficient, the pricing and profit decisions are irrelevant to capacity. Otherwise, larger capacity constraint will induce to higher prices and lower profits; (4) when used products collecting volume is sufficient, the pricing and profit decisions are irrelevant to this volume. Otherwise, new product's price will be lower and remanufactured product's price will be higher, which will also cause lower supply chain profit.