Research On The Pricing Strategy And Coordination Mechanism Of Closed-loop Supply Chain

The economical value and environmental benefit of collecting and reusing usedproducts are widely recognized in both practice and acadmia. The implementation ofclosed-loop supply chain management has become an important part of enterprise’sdevelopment strategy. With the game theory and supply chain coordination theory, thispaper mainly studies the pricing strategy and coordination mechanism of closed-loopsupply chain.Firstly, assuming that consumers have homogeneous preferences on new productsand remanufactured products, a dual-channel closed-loop supply chain decision modelwith a manufacturer, a retailer, and a third-party was established based on game theory.The influence of centralized decision-making and decentralized decision-making onoptimal pricing strategy and optimal supply chain members’ profit was analyzed, andthe efficiency loss of dual-channel closed-loop supply chain was leaded bydecentralized decision-making. To make up for such efficenciy loss, a profit andexpense sharing contract and a modified two-part tariff contract were designed to realizethe coordination of dual-channel closed-loop supply chain based on the optimal resultsof centralized decision-making. The effectiveness of the two coordination contracts wasverified through a numerical example.Secondly, assuming that consumers have heterogeneous preferences on newproducts, remanufactured products, and second-hand products, the differential pricingmodel for three different forms of the same product was established in closed-loopsupply chain to investigate whether the manufacturer engages in remanufacturing andthe distributor collects and resells used products. The results showed that the existenceof remanufactured products or second-hand products may cannibalize the marketingshare of new products. The distributor distributes second-hand products is beneficial tohimself but not the manufacturer while the manufacturer engages in remanufacturingcan benefit both the manufacturer and the distributor if the distributor does notdistribute second-hand products. However, the market with new, remanufactured, andsecond-hand products can improve the supply chain’s profit and increase theconsumers’ welfare, and under which the distributor can transfer part of the profit ofhimself to the manufacturer on the premise that both the manufacturer and thedistributor earn more than before. When the manufacturer engages in remanufacturing and the distributor distributes second-hand products, a two-part tariff contract wasproposed to realize the furter coordination of the closed-loop supply chain.Finally, the main results of the research are summarized, and future work is pointedout for further investigation.