Coordination in a closed-loop sustainable supply chain considering dual-channel and cost-sharing contract: Evidence from an emerging economy

Hannan Amoozad Mahdiraji, Kannan Govindan, Saba Madadi and Jose Arturo Garza-Reyes

Journal of the Operational Research Society, 2023, vol. 74, issue 11, 2362-2381

Abstract: Due to the significant role of the reverse supply chain (RSCs) in collecting used products and achieving a sustainable environment, both scholars and industries have paid close attention to pricing in reverse and closed-loop supply chains (CLSCs). Moreover, with the rapid development of the Internet and e-commerce in the latest decades, researchers have examined the impact of constructing online return channels based on customer behavior. In this article, a game-theoretic approach was applied to find the optimal economic and environmentally sustainable solutions in a two-level CLSC with a dual collecting channel including the retailer’s traditional channel and the manufacturer’s online channel. The purpose of the current study is to optimise the selling price, acquisition prices, market demand, channels return rate, the portion of manufacturing new products, and cost-sharing contract (CSC) participation shares for each player. For this purpose, various policies, such as centralised and decentralised modes, different structures such as Nash bargaining power, manufacturer-leader Stackelberg, and retailer-leader Stackelberg have been considered. However, the main contribution of this work compared to the existing literature is considering two CSCs from both retailer and manufacturer points of view, with a real case analysis from an emerging economy. In addition, a comprehensive sensitivity analysis has been carried out to enhance the validation of the proposed model. The results indicated that the manufacturer-leader Stackelberg strategy leads to the lowest profit for the SC in both decentralised and cooperative policies. However, when the retailer and manufacturer have equal decision-making power (Nash strategy) and the retailer participates in the remanufacturing cost (i.e. cost-sharing type-2) both the economic and environmentally sustainable goals of CLSC were met.

Date: 2023
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DOI: 10.1080/01605682.2022.2147032

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