Proposing channel coordination and horizontal cooperation in two competitive three‐echelon reverse supply chains

Abstract

Considering and analyzing various kinds of cooperation among supply chain members is an option for better managing each channel. It is noteworthy that in many real‐world cases, each of vertical and horizontal cooperation has an important role in the success of supply chains. Nevertheless, only vertical cooperation in most previous research is considered. This paper addresses both vertical and horizontal cooperation in two competitive reverse supply chains, each of which includes one collector, one remanufacturer, and one retailer. Our primary concern is to analyze quality improvement competition between the remanufacturers. Moreover, retail price competition between the retailers and the quality competition are simultaneously considered in the extended model. In this research, the investigated system has been analyzed under different structures including decentralized, centralized, horizontal cooperation, and coordinated decision‐making models. The results show that when the remanufacturers cooperate horizontally, the profit of each collector and that of the retailer will decrease compared with those in the decentralized structure. To overcome this problem, a new coordination contract named multiple‐link two‐part tariff is proposed to simultaneously coordinate the members of each chain. The proposed contract effectively convinces the remanufacturers to participate in the coordination model instead of the horizontal cooperation. Moreover, it provides a win–win–win condition for all chain members and improves the quality level of the remanufactured products. The results indicate the proper performance of the proposed contract in improving the benefits of the competing chains, especially when there exists no intense competition between the remanufacturers (i.e., when the market sensitivity to the quality of the remanufactured products is low and consequently less effort is needed to increase the quality of the remanufactured products). Moreover, the proposed contract not only is able to simultaneously increase both remanufactured products demand and of end‐of‐life products supply but also involves both economic and environmental benefits.

An Insight into Reverse Logistics with a Focus on Collection Systems

“…Rahmani et al [57] added a channel, namely a collector or third party, into the reverse chain. They analyzed two chains where the manufacturer from each chain was competing.…”

“…Some examples of a contract mechanism are revenue sharing, delays in payments, collaborative models, cost-sharing, two-part tariffs, compensation-based wholesale prices, and buy-back. He et al [54] suggested a two-part tariff contract between channels similar to Rahmani et al [57]. The proposed contract effectively improves the recovery efficiency.…”

“…Taleizadeh et al [58] concluded that a centralized structure outperforms a decentralized one in achieving the highest total expected profit, attaining the highest demand by setting the lowest selling price, and also by considering the environmental viewpoint and resource usage. Another article also mentioned that a centralized structure has better profit performance than a decentralized one [57]. The decentralization strategy seems unsuitable for RL.…”

“…Profit by recovery efficiency refers to the recycling of used products back into useful raw material. Rahmani et al [57] consider the quality of the remanufactured product as their objective. If the quality of the returned product is good enough, then the recovery efficiency of working parts or useful raw material will be higher.…”

The prices and quality of new and remanufactured products in a new market segment

“…Rahmani et al. (2020) analyze the product quality improvement under two remanufacturers. Although this research on product quality provides some insights for firms in a remanufacturing context, it does not consider a segmented market that is empirically investigated.…”