Remanufacturing for Circular Economy: Understanding the Impact of Manufacturer’s Incentive under Price Competition

Deepak Singhal, Sarat Kumar Jena, Satyabrata Aich, Sushanta Tripathy and Hee-Cheol Kim
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Deepak Singhal: School of Mechanical Engineering, KIIT Deemed to be University, Bhubaneswar, Odisha 751024, India
Sarat Kumar Jena: Operations Management School, Xavier Institute of Management, XIM University, Bhubaneswar, Odisha 751024, India
Satyabrata Aich: Wellmatix Co., Ltd., Changwon 51395, Korea
Sushanta Tripathy: School of Mechanical Engineering, KIIT Deemed to be University, Bhubaneswar, Odisha 751024, India
Hee-Cheol Kim: College of AI Convergence/Institute of Digital Anti-aging Healthcare/u-AHRC, Inje University, Gimhae 50834, Korea

Sustainability, 2021, vol. 13, issue 21, 1-19

Abstract: Business organizations all around the globe are looking to expand circular models into their supply chains to harness economic and environmental benefits. Moreover, the act of giving incentives to retailers by the manufacturer is also quite prevalent in the present business environment. These incentives are offered to promote the sales of products of a manufacturer. Therefore, this paper examines the optimal decisions for a dual-retailer closed-loop supply chain (CLSC) in which the manufacturer bestows the credit period to the one retailer (a firm that possesses shallow market penetration and has a higher insistence on the usage of the capital venture), and cash discount to the next retailer (a firm that occupies the market to a greater extent and receives lower thrust on the usage of invested capital) under a non-coordinated system and coordinated systems. This study proposes the mathematical model to determine the optimal decisions of the manufacturer in terms of credit period and cash discount and also compute the optimal decisions of the retailers for their retail prices and order quantities to maximize individual’s profit in the CLSC. Moreover, numerical analysis and sensitivity analysis is performed to get insights into the optimal decisions of the manufacturer and retailers. The results of sensitivity analysis show that credit period and cash discount increases with the rise in price elasticity, and decreases with an increase in cross-price elasticity. The findings also confirm that members of dual-retailer CLSC under coordination and manufacture’s incentive scenario generate higher environmental and economic benefits required to attain sustainability in production and consumption.

Keywords: closed-loop supply chain (CLSC); supply chain coordination; incentive; credit period; cash discount; remanufacturing (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:21:p:11839-:d:665260

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