A System Dynamic Model of Closed-Loop Supply Chain considering Recovery Strengthening and Product Differentiation

Abstract

Considering the strengthening effect of recovery on demand and the product differentiation, a multifactor closed-loop supply chain (CLSC) system dynamics (SDs) model is established and is simulated using the Vensim software. Based on the simulation data, influences of factors of “policy effect,” “recovery delay time,” “recovery strengthening,” and “recovery channel competitions” on the CLSC are analyzed. The results demonstrate that the order amplification and inventory amplification are all better than those of the traditional supply chain. Demands for remanufactured products and new products both reach the stable states in the later period. In addition, the variance analysis indicates that all the factors have a significant effect on the order and inventory amplifications in CLSC. Finally, some managerial implications are put forward.