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Reverse Channel Design: Profitability vs. Environmental Benefits

In: Sustainability in Logistics and Supply Chain Management: New Designs and Strategies. Proceedings of the Hamburg International Conference of Logistics (HICL), Vol. 21

Author

Listed:
  • Wang, Lan
  • Cai, Gangshu
  • Tsay, Andy
  • Vaharia, Asoo

Abstract

Environmental issues are a growing priority in supply chain management, which has heightened the interest in remanufacturing. A key attribute of a remanufacturing strategy is the division of labor in the reverse channel, especially whether the remanufacturing should be performed in-house or outsourced to a third party. We investigate this decision for a retailer who accepts returns of a remanufacturable product. Our formulation considers the relative cost-effectiveness of the two approaches, uncertainty in the input quality of the collected/returned used products, consumer willingness- to-pay for remanufactured product, and the extent to which the remanufactured product cannibalizes demand for new product. Our analysis predicts the retailer's propensity to remanufacture, which provides a metric of the environmental impact of each strategy.

Suggested Citation

  • Wang, Lan & Cai, Gangshu & Tsay, Andy & Vaharia, Asoo, 2015. "Reverse Channel Design: Profitability vs. Environmental Benefits," Chapters from the Proceedings of the Hamburg International Conference of Logistics (HICL), in: Kersten, Wolfgang & Blecker, Thorsten & Ringle, Christian M. (ed.), Sustainability in Logistics and Supply Chain Management: New Designs and Strategies. Proceedings of the Hamburg International Conference of Logistics , volume 21, pages 153-181, Hamburg University of Technology (TUHH), Institute of Business Logistics and General Management.
    • Handle: RePEc:zbw:hiclch:209275
    DOI: 10.15480/882.1263
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    References listed on IDEAS

    as
    1. Tsay, Andy A., 2014. "Designing and Controlling the Outsourced Supply Chain," Foundations and Trends(R) in Technology, Information and Operations Management, now publishers, vol. 7(1-2), pages 1-160, July.
    2. V. Daniel R. Guide & Luk N. Van Wassenhove, 2009. "OR FORUM---The Evolution of Closed-Loop Supply Chain Research," Operations Research, INFORMS, vol. 57(1), pages 10-18, February.
    3. Tang, Christopher S. & Zhou, Sean, 2012. "Research advances in environmentally and socially sustainable operations," European Journal of Operational Research, Elsevier, vol. 223(3), pages 585-594.
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