Study On The Optimal Pricing Model Based On Remanufacturing Closed-loop Supply Chain

Since last century, with the rapid development of global industry, the traditional extensive mode of production has increased the production and consumption. But, at the same time, it has resulted in the enormous resources consumption, which is a very important reason for the environment pollution and resource exhaustion. How to improve the resource utilization, reduce the waste emission and protect the living environment have become a hot issue for every country to consider. Remanufacturing CLSC (abbr. for closed-loop supply chain) is an effective way to solve the problem of environmental pollution and resource exhaustion. Remanufacturing activity of CLSC reduces the production cost, improves the profits and increases the competitiveness. More importantly, remanufacturing activity conforms to the green economy conception and sustainable development strategy. Therefore, it is of great significance to study the CLSC.Many factors need to be considered in the remanufacturing activity, such as remanufacturing cost, recycling mode, market demand and product pricing. Based on these, this paper studies the remanufacturing activity of CLSC from the perspective of market division and two-stage mode. First, dividing the market according to customers’differential evaluation towards new and remanufactured products, this paper establishes mathematical models of supply chain with different market participants and studies the optimal pricing strategies of new and remanufactured products, by considering such elements as the discount ratio of new and remanufactured products, and recycling, remanufacturing and resale of the waste products. Through numerical simulation, this paper also analyzes the impacts of discount ratio and remanufacturing cost on the profits of decision-makers and compares the profitability in different supply chain model. Second, this paper takes a two-stage CLSC consisting of one manufacturer and one retailer as a research issue. By considering the recycling, remanufacturing, remarketing of waste products, the competition among new and remanufactured products and other factors, it establishes a centralized and a decentralized supply chain mathematical model respectively for the purpose of obtaining optimal pricing strategies. The analytic results reveal that when the manufacturing costs of new and remanufactured products meet certain conditions, the decision makers would conduct remanufacturing activities in order to maximize the profits. Finally, the numerical examples validate above conclusions, and further it analyzes the impacts of recovery rate and substitution coefficient on the total profit of supply chain and the profit of each member.