Study On Pricing Decisions For Two Kinds Of Recovered Products With Recycled Quality Uncertainty

Accompany with the rapid development of economy, the negative effect caused by human activities becomes obvious. In order to balance socio-economic development and environment protection, foreign scholars have brought forward reverse supply chain and closed-loop supply chain theory. Recycling of waste products is a typical activity in reverse supply chain and closed-loop supply chain management. Its pricing strategy is a key factor to determine the recovery and recycling successful or not. The degree of the differences on quality of recycled products more obvious is due to shorten period of product replacement and the uncertainty of the recovery itself. Quality is also an important part of the research in the reverse supply chain, and it has a major influence on the firms’sales and revenues. Considering the reality, combined with the idea of revenue management, considering the uncertainty of the quality of recycled products, this paper studies the pricing policy for two kinds of retreating products under reverse supply chain environment, with modeling quantitative analysis method.The main work of this paper is as follows:The pricing issues of the reverse supply chain and quality different pricing are reviewed. This paper sorts and summarizes the correlative literatures, and finds the limitation of the research. Basing on this, this paper finds the opportunity and the meaning to study the pricing issues of the reverse supply chain considering quality differences.The reverse supply chains are value-increased chains. Actually, recycling is a process to resume the product value in forward supply chains. As the returned products have different quality and different performance, the firm will use different methods, such as repair, refurbishing, cannibalization and recycling, to deal with them. Considering reproduction and sales between a manufacturer and a manufacturer recycle bin in this paper. Through different remanufacturing and disposal options, the firm obtained remanufactured products and refurbished products. They can be sold in different secondary markets, satisfying different customers’demand with different price. Based on the analysis of recovering process, considering uncertainty of the quality of recycled products and the relationship between market supply and demand, defines the sales price of two kinds of recovered products as decision variables, and develop a profit-maximization pricing model. This paper employs optimization theory and method to derive the optimal pricing policy of two kinds of recovered products, to enable the maximum profit for the manufacturers. Based on discussing the nature of the model, this paper conducts numerical analysis of expected profit and optimal price, and combines quantitative research and numerical example, shows the impact of change of various state variables and parameters on the optimal prices and the expected profit, and display a number of date chart with relevant management enlightenment.Finally, a summary of the full text is brought, which sums up the conclusions and contribution of this paper, points out the inadequacy, and further research directions.