Research On Trade-in Strategy Of Closed-Loop Supply Chain Based On Risk Aversion

In the process of the economic model changing from resource consumption to resource recycling,trade-in,as a business strategy that can give consideration to environmental protection and economic development,has been sought after by business organizations and consumers.On the one hand,trade-in can realize the recycling of resources and reduce environmental pollution;On the other hand,trade-in gives higher value to waste products,encourages consumers to participate in the mechanism,and stimulates product sales through positive channels.It can be seen that the service of trade-in has a certain positive effect on improving the overall economic and environmental benefits of the supply chain.However,the market situation is complex and changeable,thus risks and benefits coexist.The risk aversion psychology of enterprise organizations in operation will affect their decision-making.This is also true for enterprises that provide trade-in service.Their risk aversion attitude will interfere with pricing decisions and the trade-in strategy,making it difficult to achieve ideal expected results.Therefore,considering the uncertainty of market demand,this thesis establishes a Stackelberg game model in the trade-in closed-loop supply chain with the manufacturer as the leader and the retailer as the follower to study the impact of risk aversion level of decision makers on the trade-in operation decision.First,assuming that both manufacturers and retailers are risk neutral,we discuss their pricing decisions and their trade in strategies.Secondly,considering the unilateral risk aversion attitude,the pricing decisions and the trade-in strategies are analyzed respectively.Thirdly,we study the pricing decisions and the trade-in strategy under the assumption that both the manufacturer and the retailer are risk averse.Through the above research,it is found that there is a conflict between the manufacturer and retailer in the trade-in strategy.Therefore,a cross shareholding method is proposed to resolve the conflict between the manufacturer and retailer.The results show that:(1)When both manufacturers and retailers are risk-neutral,both the manufacturer and the retailer want to provide trade-in service by themselves to achieve more efficient.However,from the perspective of the whole supply chain,it is a better strategy for the manufacturer to provide trade-in service.(2)When the manufacturer is risk-averse and the retailer is risk-neutral or the manufacturer is risk-neutral and the retailer is risk-averse,the retailer’s optimal strategy is to provide the trade-in service.However,from the perspective of the manufacturer or the supply chain,there is an indifferent point in the risk aversion coefficient: the optimal strategy before the point is that the manufacturer undertakes the trade-in service,and after this the manufacturer will outsource the trade-in service to the retailer.(3)On the premise that all members of the supply chain are risk-averse,from the perspective of the manufacturer or the supply chain,the trade-in strategy is affected by the risk aversion coefficient of the manufacturer and the retailer.When both are large enough or small enough,it is a better choice for the manufacturer to undertake the trade-in service.In other cases,the trade in service should be outsourced to retailers.In addition,the retailer’s strategy is not affected by the risk aversion coefficient,that is,no matter what the risk attitude of the supply chain members is,the retailer always has the motivation to provide the trade-in service to consumers.(4)To a certain extent,the establishment of cross shareholding partnership between the manufacturer and the retailer can ease their difference in the choice of the trade-in strategy,facilitate the realization of synergies,and more easily achieve the optimal overall effectiveness of the supply chain.