Analytical comparisons in a three-echelon closed-loop supply chain with price and marketing effort-dependent demand: game theory approaches

Over the last few decades, closed-loop supply chain (CLSC) has received increasing attention due to concerns over the environment and social liability. Moreover, recycling and remanufacturing of the used products have been examined because of various factors such as concerns over the environment, lack of resources, government legislations. In this research, we consider a three-echelon closed-loop supply chain consisting of a manufacturer, a third party and a retailer. The manufacturer manipulates both manufacturing from raw materials and remanufacturing from the second hands products collected by third party simultaneously. We assume that the market demand depends on selling price and marketing efforts. First, we modeled the supply chain under centralized and decentralized policies and compared their performances using numerical examples. Then we compared and analyzed the optimal decisions under different scenarios by studying the impacts of marketing efforts and collection rate on the decision variables and concluded that the supply chain profit in centralized scenario is larger than decentralized one. Using a comprehensive sensitivity analysis, managerial insights are provided. Moreover, based on the derived results, from the perspective of remanufacturing process and consumers’ welfare, one can conclude that the manufacture-Stackelberg case is often the most effective scenario in CLSC.