Study On Reverse Supply Chain Coordination And The Incentive Mechanism Based On Epr System

With the growing demand of resources, and the continuous improvement of the human’s environmental awareness, resource recycling is becoming an important measure of the strategy of the national economies’sustainable development. Enhancing the recovery of EOL (end of life) products is great significance to the development of circular economy, create a conservation-oriented society, and prevent and reduce environmental pollution. Implementation of the extended producer responsibility (EPR) system is a key way to promote manufacturers to participate actively in collection and remanufacturing activities. Developed countries already have developed laws and regulations for the recycling of EOL products and continue to be refined. China is a production and consumption power, it becomes urgent to construct and implement the EPR system. For this reason, the coordination and incentives of RSC (reverse supply chain) are researched with the game theory and incentive theory based on the early stage of EPR system’s implementation in this paper. Through the research work, it is hoped to get valuable results to direct the design of government’s environmental regulation and the operation of RSC’s members. The main contents and conclusions are summarized as follows.(1) The premium and penalty mechanisms of reverse supply chain’s member enterprises are talked about in the third chapter. In view of the three-level RSC system included a manufacturer, a processor and a collector, the manufacturer-leading Stackelberg models are established with uncertainties of both demand and return. The target premium and penalty contracts between the manufacturer and processor, and between the processor and collector are designed separately. Four different premium and penalty incentive mechanisms are given, and the influences of the proposed mechanisms to the optimal strategy of RSC are discussed. In addition, the relationship between the member’s expected profits and various parameters are analyzed by numerical simulation.(2) The incentive mechanism between government and manufacturers based on EPR system is talked about in the fourth chapter. Under the conditions of adverse selection as well as moral hazard, taking the remanufacturing rate and the effort extent of manufacturer as the asymmetric information, the incentive contract between the government and the manufacturer is designed. Based on the proposed incentive contract, the realistic conditions for monotone hazard rate of manufacturer’s profit and implementation of government’s positive incentive are provided. The relationships between parameters and government’s subsidy-tax contract are analyzed. The influences of various factors at different stages of EPR implementation to the government’s expected revenue are discussed.(3) The remanufacturing supply chain decision-making mechanism based on government’s environmental regulation is talked about in the fifth chapter. For the remanufacturing supply chain (RSC) system including a remanufacturer and a treatment agency, a bilevel programming model between the government and the supply chain system is established with game theory. Combined with current situation of China, the incentive contract between the remanufacturer and the treatment agency is designed involved with the remanufacturer’s level of participating in design for environment (DfE) activities. The premise for the remanufacturer to participate in DfE is provided, the influences of the government’s financial intervention on the system members’decision-making and expected profits are analyzed, and the effects of various parameters to design of the government’s financial policy are discussed. The results indicate that, implementation of the government’s environmental regulation is effective to motivate the remanufacturer’s DfE participation, as well as to improve the treatment agency’s effort-extent.This paper focuses on the study on the government’s incentive mechanism. It is a key way to promote manufacturers to participate actively in collection and remanufacturing activities, and the study on the influences of the mechanisms among RSC’s member enterprises to RSC’s strategy. The conclusions are helpful to the design of the government’s environmental policy and the operation of reverse supply chain in the early stage of remanufacturing industry’s development.