Research on Pricing and Service Level Strategies of Dual Channel Reverse Supply Chain Considering Consumer Preference in Multi-Regional Situations

Abstract

Facing the increasingly serious waste electrical and electronic equipment (WEEE) recycling problem, recycling enterprises actively introduce online recycling channels, build dual channel reverse supply chains (DRSC), and use high-level recycling price and service levels to enhance consumers’ recycling enthusiasm and recycling amount. Nevertheless, in China, where the imbalance of regional development is widespread, the recycling center, third-party recycler (TPR), and third-party platform (TPP) are faced with the choices of pricing and service level when facing multi-regional consumers. This paper mainly answers the following questions: (1) When the recycling center and TPP introduce online recycling channels in multi-regional situations, how should they set online recycling price, transfer price, and service level? (2) When consumer preference for online channels changes in a certain region, how should recycling enterprises adjust their optimal pricing and service level decisions for different regions to maximize their own profits? How do the profits of recycling enterprises change? In order to solve the above problems, in this paper, we propose three pricing and service level decision models for the recycling center with online channels, namely, keeping prices unchanged, unifying all prices, and maximizing its own profits. By using the Stackelberg game to solve the model, we get the optimal pricing, service level decisions, as well as the maximum profits of the recycling center, TPP, and TPR when consumer preference changes. By analyzing the results of the model, we find that the change of consumer preference for online channels in a certain region will affect the decision and profits of multi-regional recycling enterprises. Specifically, consumer preference for online channels in a certain region will not only lead to an increase in the profits of the recycling center and TPP and a decrease in the profit of local TPRs, but also an increase in the profit of TPRs in other regions. In addition, at the beginning of introducing online channels, the recycling center can adopt two strategies to avoid conflicts among channels: keeping offline transfer prices unchanged and unifying all transfer prices, but the former promotes its economic profits more significantly.

Optimal strategies for a multi-channel recycling supply chain in the clothing industry: considering consumer types

“…Li and Wu (2021) designed a multi-echelon network in a dual-channel recycling supply chain considering consumer preference. Kang et al. (2020) found that the change in consumer preference for online channels in a certain region affects the decisions and profits of multi-regional recycling enterprises.…”

“…Li and Wu (2021) designed a multi-echelon network in a dual-channel recycling supply chain considering consumer preference. Kang et al (2020) found that the change in consumer preference for online channels in a certain region affects the decisions and profits of multi-regional recycling enterprises. Although these studies have verified that consumers have a certain loyalty choice behavior toward specific channels; however, they mainly provided conclusions about consumers' preferences for online channels.…”

Strategic Analysis of the Recycler considering Consumer Behavior Based on E‐Platform Recycling

“…Preference for third-party recycling platforms will affect the price decisions of retailers and third-party recycling platforms. Kang et al [12] studied the dual-channel recycling problems based on different regions and found the changes in consumers' preference for the online channel have an effect on optimal decisions and profits of multiregion recycling companies. Feng et al [22] established a two-stage reverse supply chain model composed of a recycler and a dealer, which involves a traditional channel and online channel.…”

“…In the dual-channel reverse supply chain, consumers' preference for recycling channels affects the decisionmaking of recyclers and the supply chain performance. When dual recycling channels exist, the e-platform can attract consumers by providing better recycling services, allowing consumers to inquire about past transactions before placing an order and making correct decisions [11,12]. In the research, we introduce consumers' preferences for channels and construct three reverse supply chains to focus on the recycler's channel selection and pricing strategies using game theory.…”

Dual-Channel Pricing Decisions for Product Recycling in Green Supply Chain Operations: Considering the Impact of Consumer Loss Aversion

“…Kang et al proposed three pricing and service level decision models for online recycling centers and obtained consumer preferences through the Stackelberg game. The optimal pricing is obtained when consumer preferences change [9]. Unlike the first two, which considering consumer preferences, Zhu et al integrate consumer bargaining power into the supply chain and establish a dual-channel closed-loop supply chain consisting of manufacturers, retailers, and online recycling platforms [10].…”