Research Of Impact Of Remanufacturability And Government Subsides To Closed-loop Supply Chains' Profits

Circular economy is an economic development model, which can fully take advantage of the resource and protect the environment. With the depth of understanding and researching, the concept of closed-loop supply chain is put forward. The basic meaning of closed-loop supply chain is to integrate product recovery process of reverse logistics based on the traditional supply chain. Circular economy is a model of economic growth, and closed-loop supply chain is the manifestation of circular economy at the enterprise level . The spirit of the closed-loop supply chain and circular economy is the same. Both of them conduct to the establishment of resource-conserving and environment-friendly society, and help to promote sustainable economic and social development.The purpose of implementing closed-loop supply chain is to take advantage of the residual value of old product, to reduce production costs and thus to increase revenue, which is the most important driving force for enterprise to develop closed-loop supply chain. But the other part which can not be reused in the old product will induce disposal cost, and thus reduce profits. So the remanufacturability is an important facter to impact the profit of closed-loop supply chain. By using the method of Stackelberg Game, a closed-loop supply chain including one supplier and one retailer has been modeled. Based on the comparison of opened-loop supply chains'profits to closed-loop supply chains'profits, this paper discusses the impact of remanufacturability to total profits. By analysis, this paper concludes that remanufacturing is not profitable for the manufacturer unless the remanufacturability is beyond a certain point.When the reuse ratio falls below the certain point, carrying out closed-loop supply chain does not bring the enterprises more profits, so the enterprise has no motivation to implement closed-loop supply chain. Closed-loop supply chain has positive external effects, which can conduct to the establishment of a resource-conserving and environment-friendly society, and helps to promote sustainable economic and social development. So government should take measures to encourage enterprises to carry out closed-loop supply chain. By taking Stackelberg Game theory, this paper discusses how to determine the rate of government subsidy. There are two ways which government may consider to make subsidy : for fixed assets and for daily operations). According to the maximization of company and social benefits, government can determine the subsidy rate to support the investment of fixed assets. According to the combination of social reality and enterprise specific operations situation, government can determine the specific amount of subsidy for operations activity.