An Efficient Approach for Coordination of Dual-Channel Closed-Loop Supply Chain Management

Muhammad Arshad, Qazi Salman Khalid, Jaime Lloret and Antonio Leon
Additional contact information
Muhammad Arshad: Department of Industrial Engineering, University of Engineering & Technology, Peshawar 814 KPK, Pakistan
Qazi Salman Khalid: Department of Industrial Engineering, University of Engineering & Technology, Peshawar 814 KPK, Pakistan
Jaime Lloret: Integrated Management Coastal Research Institute, Universitat Politecnica de Valencia, C/Paranimf nº 1, Gandia, 46730 Valencia, Spain, 46022 Camino de Vera, Spain
Antonio Leon: Departamento de Comunicaciones Escuela técnica Superior de Ingenieros de Telecomunicación, 46022 Camino de Vera, Spain

Sustainability, 2018, vol. 10, issue 10, 1-20

Abstract: In this paper, a closed-loop supply chain composed of dual-channel retailers and manufacturers, a dynamic game model under the direct recovery, and an entrusted third-party recycling mode of the manufacturer is constructed. The impact of horizontal fairness concern behavior is introduced on the pricing strategies and utility of decision makers under different recycling models. The equilibrium strategy at fair neutrality is used as a reference to compare offline retails sales. Research shows that in the closed-loop supply chain of dual-channel sales, whether in the case of fair neutrality or horizontal fairness concerns, the manufacturer’s direct recycling model is superior to the entrusted third-party recycling, and the third-party recycling model is transferred by the manufacturer. In the direct recycling model, the horizontal fairness concern of offline retailers makes two retailers in the positive supply chain compete to lower the retail price in order to increase market share. Manufacturers will lower the wholesale price to encourage competition, and the price will be the horizontal fairness concern coefficient, which is negatively correlated. In the reverse supply chain, manufacturers increase the recycling rate of used products. This pricing strategy increases the utility of manufacturers and the entire supply chain system compared to fair neutral conditions, while two retailers receive diminished returns. Manufacturers, as channel managers to encourage retailers to compete for price cuts, can be coordinated through a three-way revenue sharing contract to achieve Pareto optimality.

Keywords: dual channel; supply chain management; competitive advantage; game theory; price dependent demand (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 (7)

Downloads: (external link)
https://www.mdpi.com/2071-1050/10/10/3433/pdf (application/pdf)
https://www.mdpi.com/2071-1050/10/10/3433/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:10:p:3433-:d:172182

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().