Abstract: A closed-loop supply chain with the manufacturer collecting its endoflife products is considered. The issue discussed in this paper is how the economic incentive policies impact the performance of the supply chain. A game theory model is developed for such a supply chain under the centralized decision making mode. With this model, with the penalty factor as variable, analytical expressions are obtained to calculate the recycling rate, sale price, and the supply chain profit. Then, by sensitivity analysis, it is found that, for economic incentive of product recycling, there is a threshold in regulating the penalty factor. Based on the results obtained, revenuesharing contract is designed to coordinate the supply chain such that the profit is maximized. A numerical example is used to verify the results presented in this paper. 

Key words: economic incentive policies, closedloop supply chain, sensitivity analysis, revenuesharing contract