Optimal decisions in reducing loss rate of returnable transport items

Xiangxiang Fan, Yeming Gong (), Xianhao Xu and Bipan Zou
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Xiangxiang Fan: HUST - Huazhong University of Science and Technology [Wuhan]
Yeming Gong: EM - EMLyon Business School
Xianhao Xu: HUST - Huazhong University of Science and Technology [Wuhan]
Bipan Zou: Zhongnan University of Economics and Law [China]

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Abstract: Returnable transport items (RTI) have been commonly used due to their advantages in reducing packaging waste and improving supply chain sustainability. However, RTI loss will result in a mismatch between the products flow and the RTI supply, which will affect operational continuity. This paper studies a RTI supply chain consisting of a single manufacturer and a single retailer, assuming that the retailer can reduce RTI loss by investing in staff training. We first develop an inventory model to minimize the total cost of the system. Then we analyze the optimal decision of the closed-loop supply chain of RTI. We compare the case where the retailer invests in reducing RTI loss and the case where the retailer does not. The results show that the supply chain will be more efficient if the retailer invests in reducing RTI loss, and the total cost of the system will be reduced. However, the retailer will invest only when its cost decreases. Thereby, we consider side payments as an available incentive to stimulate the retailer to invest. Moreover, we build an asymmetric Nash bargaining model considering investment cost sharing to coordinate the RTI supply chain. We compare the total optimal cost of the manufacturer and the retailer. The results show that the system can be coordinated, and the optimal total costs of both the manufacturer and the retailer are reduced.

Keywords: Returnable transport items; Closed-loop supply chain; Investment in reducing the loss rate; Investment cost sharing; Supply chain coordination (search for similar items in EconPapers)
Date: 2019-03-20
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Citations: View citations in EconPapers (4)

Published in Journal of Cleaner Production, 2019, 214, 1050-1060 p. ⟨10.1016/j.jclepro.2018.12.211⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312287

DOI: 10.1016/j.jclepro.2018.12.211

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