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Pricing Decision for a Closed-Loop Supply Chain with Technology Licensing under Collection and Remanufacturing Cost Disruptions

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  • Zuqing Huang

    (School of Management, Guangzhou University, Guangzhou 510006, China)

  • Wei Shao

    (College of Economics & Management, China Jiliang University, Hangzhou 310018, China)

  • Lijun Meng

    (College of Economics & Management, China Jiliang University, Hangzhou 310018, China)

  • Guoqing Zhang

    (Department of Mechanical, Automotive & Materials Engineering, University of Windsor, Windsor, ON N9B 3P4, Canada)

  • Qiang (Patrick) Qiang

    (Great Valley School of Graduate Professional Studies, Pennsylvania State University, Malvern, PA 19355, USA)

Abstract

Closed-loop supply chain (CLSC) management faces collection and remanufacturing cost disruption challenges. This study explores a CLSC system wherein original equipment manufacturers (OEMs) license the third-party remanufacturer (TPR) to bear the remanufacturing activities and investigate pricing decisions in the CLSC, while considering collection and remanufacturing cost disruptions. To obtain the optimal pricing strategy, we develop game theory models under the disruptions of both centralized and decentralized CLSCs. Based on theoretical and numerical analyses, we obtain the following results: (1) Whether or not disruption events occur, the centralized supply chain can better encourage consumers to participate in the collection of used products than a decentralized supply chain; (2) when collection disruption in a large positive region or the remanufacturing cost disruption in a large negative region occurs, OEM and TPR profits will greatly increase, and the OEM will raise the licensing fee to extract more profit from the remanufacturing activity; (3) a certain robust region exists for the retail price and wholesale price when the supply chain faces disruption increase; (4) when the supply chain faces the disruptions, it has great influence on the OEM’s licensing fee but little on the TPR’s acquisition price. The main contributions of the study include: (1) We considered the impacts of both technology licensing and collection and remanufacturing cost disruption; (2) we developed game theory models to determine the optimal manufacturing and remanufacturing quantities, and pricing strategy under the disruptions; (3) based on theoretical and numerical analyses, we presented some interesting and important insights. The results of this paper could provide useful guidelines for supply chain members on how to effectively control costs to obtain more profit by adjusting prices and selecting a better operation mode for the closed-loop supply chain.

Suggested Citation

  • Zuqing Huang & Wei Shao & Lijun Meng & Guoqing Zhang & Qiang (Patrick) Qiang, 2022. "Pricing Decision for a Closed-Loop Supply Chain with Technology Licensing under Collection and Remanufacturing Cost Disruptions," Sustainability, MDPI, vol. 14(6), pages 1-19, March.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:6:p:3354-:d:770045
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    References listed on IDEAS

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    2. Zongbao Zou & Cong Wang & Qinjia Zhong, 2022. "How Does Retailer-Oriented Remanufacturing Affect the OEM’s Quality Choice?," Sustainability, MDPI, vol. 14(13), pages 1-21, June.
    3. Yanli Fang & Zhuoyi Ren & Fang Yang, 2023. "The Impact of Carbon Allowance Allocation Rules on Remanufacturing Decisions in a Closed-Loop Supply Chain," Mathematics, MDPI, vol. 11(13), pages 1-24, June.

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