Managing mass customization products with modular design for recycling in a closed‐loop supply chain

Abstract

Investing in the modular architecture design for mass customization (MC) products cannot only enable product variety, thereby improving MC ability to cope with consumer individual needs, but also increase the product interchangeability, thereby reducing the recycling and remanufacturing costs. This paper considers a closed‐loop supply chain (CLSC) with MC, in which the manufacturer sells the new, modular MC products via the retailer and also actively recycles the used ones for remanufacturing. We study the optimal modularity level for new MC products and the best recycling channel for used MC products in a CLSC. One centralized and two decentralized recycling decision models are formulated, and then the equilibrium solutions among proposed models are compared and analyzed. The government subsidy and channel leadership are further discussed in extension. Different from the traditional view that outsourcing the recycling activity to retailer is best because of its proximity to consumers, our results suggest that the manufacturer directly recycling used MC products can be optimal in terms of modularity level, recycling rate, supply chain profits, total social surplus, and decision‐making speed.

Recycling channel strategy in the presence of free-riding in the carbon neutrality era

“…Prior research predominantly focuses on the influence of free riding without considering the role of recycling services. Likewise, studies that discuss the impact of recycling services on the profits of manufacturers [ 11 , 12 , 30 , 65 ] fail to account for the impact of free riding. In this study, we consider both factors.…”

“…Previous studies on waste product recycling in the CLSC mainly emphasize the restrictive role of social responsibility [ 8 , 9 , 12 ] and recycling channels [ 21 , 29 , 31 , 48 , 49 ]. Subramanian et al explored the leverage regulation of the extended producer responsibility system, aiming at the problems on recycling and disposal of waste products [ 9 ].…”

“…Given these issues, researchers have turned their attention to the CLSC. A plethora of papers explore CLSC development from various angles, including the impact of free-riding behaviors [ 3 , 4 , 6 , 7 ], waste product recycling [ [8] , [9] , [10] , [11] , [12] ], competition [ [13] , [14] , [15] ], channel power structures [ 16 , 17 ], different collector dynamics [ 18 , 19 ], collection effort implementation [ 20 ], and diverse collection cost structures [ 21 ]. Researchers have found that the decisions of traditional and online retailers are influenced by consumer free riding [ 22 , 23 ].…”

Contract manufacturer encroachment via the customer‐to‐manufacturer strategy under different platform selling modes

“…Product customization has been studied in the context of mass customization. Jiang (2023) regards the modularity level as the manufacturer's decision variable, and models customer demand as a linear function at the modularity level. In the research on modeling horizontal product features, Dewan et al (2003) study product customization using an analytical model, in which the level of customization is represented as an arc of the circle.…”

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“…Customers are more likely to make purchases when they perceive the value and relevance of the offerings (Jiang, 2023). Industry 4.0 technologies, such as IoT (Internet of Things), automation, and data analytics, enable more efficient and streamlined production processes Wolniak, , 2021.…”