Joint Inventory and Pricing Policy for an Online to Offline Closed-Loop Supply Chain Model with Random Defective Rate and Returnable Transport Items

Biswajit Sarkar, Mehran Ullah and Seok-Beom Choi
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Biswajit Sarkar: Department of Industrial & Management Engineering, Hanyang University, Ansan Gyeonggi-do 15588, Korea
Mehran Ullah: Department of Industrial & Management Engineering, Hanyang University, Ansan Gyeonggi-do 15588, Korea
Seok-Beom Choi: Department of International Business, Cheju Halla University, Jeju-do 63092, Korea

Mathematics, 2019, vol. 7, issue 6, 1-20

Abstract: Environmental deterioration is one of the current hot topics of the business world. To cope with the negative environmental impacts of corporate activities, researchers introduced the concept of closed-loop supply chain (CLSC) management and remanufacturing. This paper studies joint inventory and pricing decisions in a multi-echelon CLSC model that considers online to offline (O2O) business strategy. An imperfect production process is examined with a random defective rate that follows a probability distribution. The results show that the O2O channel increases the profit of the system. For the defective rate, three different distributions are considered and three examples are solved. The results of the three examples conclude that the highest profit is generated when the defective rate follows a uniform distribution. Furthermore, based on the salvage value of defective items, two cases were studied. Results and sensitivity analysis show that the increase in defective rate does not reduce total profit in every situation, as perceived by the existing literature. Sensitivity analysis and numerical examples are given to show robustness of the model and draw important managerial insights.

Keywords: CLSC management; O2O channel; random defective rate; hybrid manufacturing- remanufacturing strategy (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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