In-house versus outsourcing collection in a closed-loop supply chain with remanufacturing technology development

Shuzhen Chen, Yuchen Pan, Desheng Wu and Alexandre Dolgui

International Journal of Production Research, 2023, vol. 61, issue 6, 1720-1735

Abstract: This paper develops a game model of a closed-loop supply chain consisting of one manufacturer, one remanufacturer and one retailer and investigates the long-term collection strategies of the manufacturer who needs to cooperate with the remanufacturer to develop the remanufacturing technology. The game model is developed from a fully dynamic perspective on the remanufacturing technology development and analyzed using the system dynamics method. We identify the trade-off in the choice of collection strategies: the early entry in the remanufacturing industry versus the complete control in the later stage. The simulation results show that when the entry barrier to the remanufacturing industry is low, the manufacturer can develop the remanufacturing technology in a short time and the direct reverse channel outperforms the indirect reverse channel; when the entry barrier is high, the manufacturer can achieve more profits under the indirect reverse channel by acquiring the remanufacturing technology directly from the remanufacturer. Moreover, the indirect reverse channel is more likely to be superior for low-barrier remanufacturing industry when the cost advantage is high as the early entry in the remanufacturing industry becomes more important than the complete control in the later stage.

Date: 2023
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DOI: 10.1080/00207543.2022.2045376

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