A Coordinated Revenue-Sharing Model for a Sustainable Closed-Loop Supply Chain

Hao Zou, Jin Qin, Peng Yang and Bo Dai
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Hao Zou: School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China
Jin Qin: School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China
Peng Yang: School of Business Administration, Hunan University of Finance and Economics, Changsha 410205, China
Bo Dai: Laboratoire d’optimisation des Systeme Industriels, Institut Charles Delaunay and UMR CNRS 6281, Universite de Technologie de Troyes, 12 Rue Marie Curie, CS 42060, 10004 Troyes CEDEX, France

Sustainability, 2018, vol. 10, issue 9, 1-15

Abstract: This study takes a sustainable closed-loop supply chain composed of one manufacturer and two price-competitive retailers as the object and considers the two-way risk aversion characteristics of manufacturers and retailers in examining the coordination mechanism in a closed-loop supply chain. Using game theory, optimal decision-making on wholesale prices, retail prices, and recycling prices are explored under decentralized and centralized decision-making scenarios, and representative expressions are established. By analyzing the effects of the risk aversion coefficient on players’ optimal strategies, we found that the manufacturer’s and retailers’ risk aversion coefficients have different effects on the wholesale price, retail price, and recycling price under decentralized decision-making, while in a centralized decision-making scenario, the effects are the same. The comparison also found that the wholesale price and recovery price under the centralized decision-making scenario are higher than those under decentralized decision-making. To achieve closed-loop supply chain coordination, we propose a revenue-sharing contract that we demonstrate by coordinating price competition with risk aversion and analyze a range of parameters that influence the revenue-sharing contract. The results show that the proposed contract can increase the profits of supply chain members by identifying the optimal revenue-sharing ratio.

Keywords: sustainable closed-loop supply chain; revenue-sharing contract; risk aversion; price competition; simulation analysis; model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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