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The Coordination and Optimization of Closed-Loop Supply Chain with Lots of Factors

Author

Listed:
  • Shi Chengdong

    (School of Business, Shandong University of Technology, Zibo255000, China)

  • Zhou Guanglu

    (Department of Maths and Statistics, Curtin University, Perth, Australia)

  • Bian Dunxin

    (School of Electrical and Electronic Engineering, Shandong University of Technology, Zibo255000, China)

  • Wu Meixiang

    (School of Business, Shandong University of Technology, Zibo255000, China)

Abstract

Consider a closed-loop supply chain including a manufacturer, a retailer and two third party recyclers as the background. A coordination and optimization model is built by using the downside-risk function, Cournot model and government subsidy excitation function. The effect of risk characteristics, government subsidy and Cournot competition on supply chain is analyzed, and the impact of revenue-and-expense sharing contract is studied in the channel, which shows that the contract cannot coordinate and optimize the closed-loop supply chain. Also, risk sharing contract and expense sharing contract are designed, which can offer the desired downside protection to the retailer, provide more profits to the agents, and accomplish channel coordination and optimization. Moreover, an application example is given for testing the effectiveness and feasibility of the contract, and the bound and rule of the contract parameters are given. Finally, by the analysis of numerical simulation and sensitivity of the model based on the contract, the validity and practicability of the model are verified, and the relationship between government subsidy, risk characteristics, competitive characteristics with the supply chain is obtained. This study provides decision support and decision-making reference for the development of remanufacturing industry.

Suggested Citation

  • Shi Chengdong & Zhou Guanglu & Bian Dunxin & Wu Meixiang, 2016. "The Coordination and Optimization of Closed-Loop Supply Chain with Lots of Factors," Journal of Systems Science and Information, De Gruyter, vol. 4(4), pages 307-320, August.
    • Handle: RePEc:bpj:jossai:v:4:y:2016:i:4:p:307-320:n:2
    DOI: 10.21078/JSSI-2016-307-14
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    References listed on IDEAS

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    1. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Manufacturer's revenue-sharing contract and retail competition," European Journal of Operational Research, Elsevier, vol. 186(2), pages 637-651, April.
    2. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    3. Lester G. Telser, 1955. "Safety First and Hedging," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 23(1), pages 1-16.
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