An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management

Abstract

In this paper, a closed-loop supply chain composed of dual-channel retailers and manufacturers, a dynamic game model under the direct recovery, and an entrusted third-party recycling mode of the manufacturer is constructed. The impact of horizontal fairness concern behavior is introduced on the pricing strategies and utility of decision makers under different recycling models. The equilibrium strategy at fair neutrality is used as a reference to compare offline retails sales. Research shows that in the closed-loop supply chain of dual-channel sales, whether in the case of fair neutrality or horizontal fairness concerns, the manufacturer’s direct recycling model is superior to the entrusted third-party recycling, and the third-party recycling model is transferred by the manufacturer. In the direct recycling model, the horizontal fairness concern of offline retailers makes two retailers in the positive supply chain compete to lower the retail price in order to increase market share. Manufacturers will lower the wholesale price to encourage competition, and the price will be the horizontal fairness concern coefficient, which is negatively correlated. In the reverse supply chain, manufacturers increase the recycling rate of used products. This pricing strategy increases the utility of manufacturers and the entire supply chain system compared to fair neutral conditions, while two retailers receive diminished returns. Manufacturers, as channel managers to encourage retailers to compete for price cuts, can be coordinated through a three-way revenue sharing contract to achieve Pareto optimality.

Government Reward-Penalty Mechanism in Dual-Channel Closed-Loop Supply Chain

“…The manufacturer produces new products with unit cost c, and sells the product through two channels, the direct channel at price p 1 and the retailer channel at wholesale price w. The retailer then sells the product at price p 2 to customers. The manufacturer can achieve residual value s of the used products from consumers [1,15,26]. Meanwhile, the government will implement an RPM scheme for the individual manufacturer according to its collection rate of the used products from consumers, which is consistent with Wang et al [25].…”

Green Manufacturing Strategy Considering Retailers’ Fairness Concerns

“…Du et al [14] Chen et al [16] Zhou et al [17] Ma et al [19] Zhang et al [22] Wang et al [23] Li et al [25] Arshad et al [29] Zhang et al [30] Zhang et al [33] This paper…”

“…In our work similar to this, we investigated the choice of a green manufacturing strategy under dual-channel when the retailer has fairness concerns. Arshad et al [29] introduced horizontal fairness concerns behavior into the dual-channel closed supply chain based on manufacturer monopoly, analyzing the influence of decision makers' fairness concerns on the choice of recycling strategy, and the optimal decision of members. Zhang et al [30] focused on investigating the effects of consumer environmental awareness (CEA) and retailer fairness on environmental quality and green product prices by comparing three different decision scenarios.…”

“…In addition, they further proposed incentive contracts to optimize decision-making during order allocation. In terms of fairness concerns, most scholars focus on the influences of the fairness concerns of decision-makers on channel conflicts and pricing, such as in [6,28,31,32,34,35]; only in [29] is the dual-channel discussed when considering fairness. In [30,33], the green manufacturing of products is discussed, and [33] also studied government subsidies.…”

Pricing and coordination of competitive recycling and remanufacturing supply chain considering the quality of recycled products

“…Many scholars develop pricing models from different perspectives, such as corporate social responsibility [18], consumer environmental preference [17], emission tax [40], government subsidies [28,29,43], service level [19], and horizontal fairness concern behavior [2]. However, these research works are mainly based on the relatively simple market structure with only one of the manufacturers, the retailers, the recyclers, and the product.…”