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Analysing remanufacturing decisions of supply chain members in uncertainty of consumer preferences

Author

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  • Tong Shu
  • Huaisi Liao
  • Shou Chen
  • Shouyang Wang
  • Kin Keung Lai
  • Lu Gan

Abstract

This article formulates a gaming model of the closed-loop supply chain with manufacturers (as the leader), sellers and consumers where consumers may or may not be willing to pay remunerative price for remanufactured products vis-à-vis new products. In the model, manufacturers produce new as well as remanufactured products, whereas sellers distribute them. In stable circumstances, this article presents the functional formula of the optimal manufacturing pricing decisions. The results show that when the cost of new products is significantly lower than that of remanufactured ones, manufacturers choose to produce new products only. When the difference between cost of new and remanufactured products is moderate, manufacturers tend to produce both new and remanufactured products, and in some regions, production of new and remanufactured products is proportional to each other. When the difference between cost of new and remanufactured products is enormous, their production and sale tend to stop. Also, this article analyses the effects of varying cost of new and remanufactured products and the recycling rate on pricing decisions of supply chain members. This article contributes to the management of manufacturers’ and sellers’ remanufacturing decisions and also provides advice on how governments can guide consumer preferences.

Suggested Citation

  • Tong Shu & Huaisi Liao & Shou Chen & Shouyang Wang & Kin Keung Lai & Lu Gan, 2016. "Analysing remanufacturing decisions of supply chain members in uncertainty of consumer preferences," Applied Economics, Taylor & Francis Journals, vol. 48(34), pages 3208-3227, July.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:34:p:3208-3227
    DOI: 10.1080/00036846.2015.1136400
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    Cited by:

    1. Ehsan Shekarian & Simme Douwe Flapper, 2021. "Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective," Sustainability, MDPI, vol. 13(3), pages 1-32, January.
    2. Saeid Rezaei & Reza Maihami, 2020. "Optimizing the sustainable decisions in a multi-echelon closed-loop supply chain of the manufacturing/remanufacturing products with a competitive environment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 22(7), pages 6445-6471, October.
    3. Shan Chen & Xu Wang & Yingbo Wu & Fuli Zhou, 2017. "Pricing Policies of a Dual-Channel Supply Chain Considering Channel Environmental Sustainability," Sustainability, MDPI, vol. 9(3), pages 1-14, March.
    4. Chai, Qiangfei & Xiao, Zhongdong & Lai, Kee-hung & Zhou, Guanghui, 2018. "Can carbon cap and trade mechanism be beneficial for remanufacturing?," International Journal of Production Economics, Elsevier, vol. 203(C), pages 311-321.

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