Warranty Period Decision and Coordination in Closed-Loop Supply Chains Considering Remanufacturing and Consumer Behavior

Abstract

The closed-loop supply chain management model is an effective way to promote sustainable economic development and environmental protection. Increasing the sales volume of remanufactured products to stimulate green growth is a key issue in the development of closed-loop supply chains. By designing an effective warranty strategy, customer’s perceived value can be enhanced and market demand can be stimulated. This study cuts through the warranty period of closed-loop supply chain products. Based on the perspective of consumer behavior, game theory is used to construct the optimal decision-making model for closed-loop supply chains. The optimal warranty decision making for new products and remanufactured products under centralized and decentralized decision-making models is discussed. Further, the impact of the closed-loop supply chain system with warranty services and the design of contract coordination is also shown. We show that consumer preference has a positive impact on the sales of remanufactured products and the profits of enterprises; with the extension of the new product and remanufacturing warranty period, the profit of the supply chain system first increases and then decreases, and the value is maximized at the extreme point in the manufacturer-led decision-making model. Furthermore, the leader gains higher profits with bargaining power, but the profit of the supply chain system under decentralized decision model is less than that of the centralized decision model, reflecting the double marginalization effect. The revenue sharing contract and the two-charge contract designed in this study coordinate the closed-loop supply chain system with warranty services, so that the member companies in the supply chain can achieve Pareto improvement.

Main Dimensions in the Building of the Circular Supply Chain: A Literature Review

“…Customers' behavior directly affects the capacity of the market. In the supply chain, in order to influence such behavior, it should consider the difference between the cost of the warranty for new products and remanufactured products and extend the customers' utility function from the consumer's perspective, optimizing warranty period decisions [88].…”

Power Battery Echelon Utilization and Recycling Strategy for New Energy Vehicles Based on Blockchain Technology

“…Moreover, Wu [33] discussed the competitive pricing strategies of supply chain members and described the balanced decision-making about consumers' preference for recycled products. Much of the research on recycling has examined consumer willingness and government behavior [34,35]. Sun and Li [36] focused on recyclable green logistics packaging and explored the behavior choices of the government, logistics enterprises, and consumers.…”