Necessary conditions for coordination of dual-channel closed-loop supply chain

• Published in: Technological forecasting & social change Vol. 151; p. 119823
• Main Authors: Yuan, Yanhong, Yang, Jinyao, Li, Yang, Li, Wei
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.02.2020; Elsevier B.V; Elsevier Science Ltd
• Subjects: Analysis; Closed-loop supply chain; Consumers; Contract coordination mechanism; Coordination; Costs; Decision making; Equilibrium conditions; Game theory; Internet; Logistics; Manufacturing; Numerical analysis; Online recycling channel; Optimization; Optimization analysis theory; Recovering; Recycling; Recycling industry; Robustness (mathematics); Supply chains; Online recycling channel; Contract coordination mechanism; Optimization analysis theory; Game theory; Closed-loop supply chain
• ISSN: 0040-1625; 1873-5509
• DOI: 10.1016/j.techfore.2019.119823

•We study the necessary conditions for achieving the coordination of interest in the closed-loop supply chain.•Multi-channel recycling must be carried out under the premise of uniform recycling costs.•The price increase of the product at the factory should be eliminated.•Recovery price is affected by residual value and channel competition. In order to eliminate profit loss caused by decentralized decision-making in closed-loop supply chain systems, this paper adopts the method of optimization analysis and game theory to analyze the necessary conditions for manufacturers, retailers and third-party online recyclers to achieve interest coordination under equilibrium conditions. In addition, the robustness of the results is verified by numerical analysis. The results show that in order to make the total profit of decentralized decision-making equivalent to that of centralized decision-making, the recycling cost of retailers and third-party recyclers must be the same; new products must be shipped at zero profit, re-manufactured products shall be sold at the difference between the residual value of the recovered product and the cost of recovery, and the manufacturer's recycling price shall be determined by the cost of recycling and residual value. It implies that multi-channel recycling must be carried out under the premise of uniform recycling costs. At the same time as the elimination of the product price increase, the manufacturer's income must be guaranteed through agreements and other forms. The government can realize the recovery price in the direction of benefiting consumers by improving the residual value of used products and easing channel competition.