Effect of New Product Quality on Remanufacturing Models in Closed-loop Supply Chain

doi:10.3969/j.issn.1007-7375.2018.05.005

Abstract

Abstract: Considering the quality of new products, the choice of OEM (original equipment manufacturers) and 3PR(third-party remanufacturers) on closed-loop supply chain remanufacturing model is studied. We develop two Stackleberg models where manufacturers perform remanufacturing operations through either outsourcing or authorization based on game theory. The backward induction analysis method is applied to get the equilibrium solution and supply chain profits on remanufacturing operation selections. This study compares these two models by modeling the game results between the OEM and the 3PR.The results suggest that the outsourcing approach under Stackleberg Game get an advantage over authorization approach in supply chain profits, consumer surplus and social welfare. In both scenarios, the OEM obtains higher profits through outsourcing approach. The 3PR has different selection in terms of the consumer value discount for the remanufactured product and new product quality. When the consumer value discount for the remanufactured product and the scaling parameter meet certain conditions, as well as the high quality of new products. Outsourcing remanufacturing is more environmentally friendly than authorization remanufacturing.

Key words: product quality, remanufacturing, closed-loop supply chain, Stackelberg equilibrium, outsourcing, patent authorization

CLC Number:

F270.5

NIE Jiajia, XIONG Lujie. Effect of New Product Quality on Remanufacturing Models in Closed-loop Supply Chain[J]. Industrial Engineering Journal , 2018, 21(5): 31-39,63.

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