Decision Strategies Of Closed-loop Supply Chain Under Demand Disruptions

With the attraction of economic benefits and under the pressure of the environmental protection policy, many companies start to carry out the activities of recycling and remanufacturing the used products, which is called the reverse supply chain. The closed-loop supply chain (CLSC), which combines both forward and reverse SC and covers the entire life cycle of a product from cradle to grave, could provide economic and environmental benefits to society. Therefore, the CLSC management has gained tremendous attention both in industry and academia.With the development of global supply chain, many uncertain factors appears, the operation environment becomes more complex, and the number and the frequency of the emergency events increases. Moreover, CLSC’s network is more complex than the traditional one. Therefore, it’s easier for the CLSC to be affected by the emergency events. And the introduce of concept of disruption management becomes more important to the CLSC. Recent researches mainly focus on making decision in centralized CLSC and designing the contracts to coordinate with the decentralized CLSC. There is few research on how to make emergency decisions in decentralized CLSC under disruptions. Based on the status above, I examine a centralized CLSC and a decentralized CLSC under demand disruptions respectively to explore how to make optimal decision mechanism in different disruption perturbations. In addition, I also study the ripple effect resulting from demand disruption and the control functions of the revenue and expense contract. The results are as follows:(1) Optimal emergency strategies:the optimal order quantity and the returned rate in decentralized CLSC have the same robustness perturbation with the centralized CLSC. When exceeding the robustness perturbation, this two decision variables should be adjusted in the same direction with demand disruptions;(2) Optimal decision mode:when the demand disruption increases, centralized decision mechanism could help the whole CLSC obtain more profits; when the demand disruption decreases, centralized decision mechanism is not always the best;(3) Contract coordination:the revenue and expense contract could coordinate with the decentralized CLSC under demand disruption by revising the parameter in it; (4) Ripple effect:when no contract exists, demand disruptions act as amplification effect; when the revenue contract coordinate with the decentralized CLSC under disruptions, the ripple effect could be controlled by setting the relevant parameter.