Coordination Of Closed-loop Supply Chain With Government Incentive System

With the rapid development of the technology and constant progress of the productivity, the material wealth of customers are increased continually, which shortens the life cycle of production constantly, accompanied with the issues like environmental pollution and waste of natural resources at the same time.This paper develops a closed-loop supply chain manufacturing Stackelberg game model with one manufacturer and one retailer under the government incentive system, where the remanufacturing products are undifferentiated with the new ones.This paper is different from much of the extant literature about remanufacturing because they consider the effect of structure and recovery strategy on the system efficiency rather than the coordination mechanism with government subsidy. We mainly focus on the coordination of both the manufacturer and retailer in the decentralized channel, and find that the optimal return rate increases with the degree of government incentives, while the manufacturer’s profit is closely related to government policy. Then we find that the revenue-sharing contract can coordinate the closed-loop supply chain successfully, and the government incentive mechanism system enlarges the Pareto range of the retailer’s revenue share. Then, it makes maximize profits of every member of system when assure benefits of the system, and we can get the multi-win situation for the manufacturer and the retailer.To a certain extent, this paper expands the span and depth of the application of reverse supply chain, and propose some suggestions and theory supported to development of Chinese enterprises in reverse supply chain.