IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v232y2021ics0925527320302887.html
   My bibliography  Save this article

Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing

Author

Listed:
  • Liu, Zhuojun
  • Chen, Jing
  • Diallo, Claver
  • Venkatadri, Uday

Abstract

The development of information technologies and e-commerce has allowed many companies to set up online platforms to sell their products in dual-channel supply chain (SC) networks. The double competition between new and remanufactured products within channels and across competing channels affects manufacturer and retailer pricing decisions. However, the current state of the literature shows a gap in the modelling and analysis of a dual-channel SC with both cross-channel competition and channel costs. To fill this gap, this paper develops a model for a CLSC in which the manufacturer sells new products through a retail channel and also directly through its online channel. The manufacturer may also sell remanufactured products in its online direct channel if it decides to produce them. The results indicate that: (i) the manufacturer’s production and optimal pricing strategies depend on both production and channel selling costs; (ii) remanufacturing is not considered by the manufacturer when the unit manufacturing cost is sufficiently low and the retailer’s channel cost is sufficiently high; (iii) the introduction of remanufacturing hurts the retailer’s profit only when the unit manufacturing cost is sufficiently high; and (iv) selling the new product online mitigates the effect of remanufacturing on the retailer, and thus a high customer’s acceptance of the remanufactured product can benefit the retailer.

Suggested Citation

  • Liu, Zhuojun & Chen, Jing & Diallo, Claver & Venkatadri, Uday, 2021. "Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing," International Journal of Production Economics, Elsevier, vol. 232(C).
    • Handle: RePEc:eee:proeco:v:232:y:2021:i:c:s0925527320302887
    DOI: 10.1016/j.ijpe.2020.107935
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527320302887
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2020.107935?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gila E. Fruchter & Charles S. Tapiero, 2005. "Dynamic Online And Offline Channel Pricing For Heterogeneous Customers In Virtual Acceptance," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 137-150.
    2. Borenich, Andrea & Dickbauer, Yanick & Reimann, Marc & Souza, Gilvan C., 2020. "Should a manufacturer sell refurbished returns on the secondary market to incentivize retailers to reduce consumer returns?," European Journal of Operational Research, Elsevier, vol. 282(2), pages 569-579.
    3. Gan, Shu-San & Pujawan, I. Nyoman & Suparno, & Widodo, Basuki, 2017. "Pricing decision for new and remanufactured product in a closed-loop supply chain with separate sales-channel," International Journal of Production Economics, Elsevier, vol. 190(C), pages 120-132.
    4. Atalay Atasu & Miklos Sarvary & Luk N. Van Wassenhove, 2008. "Remanufacturing as a Marketing Strategy," Management Science, INFORMS, vol. 54(10), pages 1731-1746, October.
    5. Yan, Wei & Xiong, Yu & Xiong, Zhongkai & Guo, Nian, 2015. "Bricks vs. clicks: Which is better for marketing remanufactured products?," European Journal of Operational Research, Elsevier, vol. 242(2), pages 434-444.
    6. Manjot Singh Bhatia & Rajiv Kumar Srivastava, 2019. "Antecedents of implementation success in closed-loop supply chain: an empirical investigation," International Journal of Production Research, Taylor & Francis Journals, vol. 57(23), pages 7344-7360, December.
    7. Benrong Zheng & Chao Yang & Jun Yang & Min Zhang, 2017. "Dual-channel closed loop supply chains: forward channel competition, power structures and coordination," International Journal of Production Research, Taylor & Francis Journals, vol. 55(12), pages 3510-3527, June.
    8. Rajesh Kumar & Parthasarathy Ramachandran, 2016. "Revenue management in remanufacturing: perspectives, review of current literature and research directions," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 2185-2201, April.
    9. Yenipazarli, Arda, 2016. "Managing new and remanufactured products to mitigate environmental damage under emissions regulation," European Journal of Operational Research, Elsevier, vol. 249(1), pages 117-130.
    10. Wu, Xiaole & Zhou, Yu, 2017. "The optimal reverse channel choice under supply chain competition," European Journal of Operational Research, Elsevier, vol. 259(1), pages 63-66.
    11. Yan Liu & Yongsheng Cheng & Hong Chen & Sidai Guo & Yujia Lu, 2018. "Selling Remanufactured Products under One Roof or Two? A Sustainability Analysis on Channel Structures for New and Remanufactured Products," Sustainability, MDPI, vol. 10(7), pages 1-20, July.
    12. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    13. Hong, Xianpei & Xu, Lei & Du, Peng & Wang, Wenjuan, 2015. "Joint advertising, pricing and collection decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 167(C), pages 12-22.
    14. T. M. Rofin & Biswajit Mahanty, 2018. "Optimal dual-channel supply chain configuration for product categories with different customer preference of online channel," Electronic Commerce Research, Springer, vol. 18(3), pages 507-536, September.
    15. Feng, Lipan & Govindan, Kannan & Li, Chunfa, 2017. "Strategic planning: Design and coordination for dual-recycling channel reverse supply chain considering consumer behavior," European Journal of Operational Research, Elsevier, vol. 260(2), pages 601-612.
    16. Vlachos, Dimitrios & Dekker, Rommert, 2003. "Return handling options and order quantities for single period products," European Journal of Operational Research, Elsevier, vol. 151(1), pages 38-52, November.
    17. Han, Xiaohua & Wu, Haiyan & Yang, Qianxia & Shang, Jennifer, 2016. "Reverse channel selection under remanufacturing risks: Balancing profitability and robustness," International Journal of Production Economics, Elsevier, vol. 182(C), pages 63-72.
    18. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    19. Xie, JiaPing & Liang, Ling & Liu, LuHao & Ieromonachou, Petros, 2017. "Coordination contracts of dual-channel with cooperation advertising in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 528-538.
    20. He, Peng & He, Yong & Xu, Henry, 2019. "Channel structure and pricing in a dual-channel closed-loop supply chain with government subsidy," International Journal of Production Economics, Elsevier, vol. 213(C), pages 108-123.
    21. Liu, Zhuojun & Chen, Jing & Diallo, Claver, 2018. "Optimal production and pricing strategies for a remanufacturing firm," International Journal of Production Economics, Elsevier, vol. 204(C), pages 290-315.
    22. Xiaochen Sun & Yancong Zhou & Yongjian Li & Kannan Govindan & Xiaonan Han, 2020. "Differentiation competition between new and remanufactured products considering third-party remanufacturing," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(1), pages 161-180, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yufei Hu & Lianghua Chen & Yingying Chi & Bowen Song, 2022. "Manufacturer encroachment on a closed‐loop supply chain with design for remanufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1941-1959, September.
    2. Zhang, Ling & Zhang, Zheng, 2022. "Dynamic analysis of the decision of authorized remanufacturing supply chain affected by government subsidies under cap-and-trade policies," Chaos, Solitons & Fractals, Elsevier, vol. 160(C).
    3. Yuqing Hu & Lijun Meng & Jingya Xue & Hongying Xia, 2023. "Authorization or Outsourcing: Considering the Contrast/Assimilation Effect and Network Externality of Remanufactured Products under Government Subsidy," Sustainability, MDPI, vol. 15(14), pages 1-27, July.
    4. Matsui, Kenji, 2023. "Dual-recycling channel reverse supply chain design of recycling platforms under acquisition price competition," International Journal of Production Economics, Elsevier, vol. 259(C).
    5. Tian, Chen & Xiao, Tiaojun & Shang, Jennifer, 2022. "Channel differentiation strategy in a dual-channel supply chain considering free riding behavior," European Journal of Operational Research, Elsevier, vol. 301(2), pages 473-485.
    6. Sun, Cuiying & Zhang, Xiong & Zhou, Yong-Wu & Cao, Bin, 2022. "Pricing, financing and channel structure for capital-constrained dual-channel supply chains with product heterogeneity," International Journal of Production Economics, Elsevier, vol. 253(C).
    7. Niu, Baozhuang & Xu, Haotao & Dai, Zhipeng, 2022. "Check Only Once? Health Information Exchange between Competing Private Hospitals," Omega, Elsevier, vol. 107(C).
    8. Syed Abdul Rehman Khan & Manoj Mathew & P. D. D. Dominic & Muhammad Umar, 2022. "Evaluation and selection strategy for green supply chain using interval-valued q-rung orthopair fuzzy combinative distance-based assessment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(9), pages 10633-10665, September.
    9. Yuqing Hu & Lijun Meng & Zuqing Huang, 2023. "Pricing and Sales Effort Decisions in a Closed-Loop Supply Chain Considering the Network Externality of Remanufactured Product," Sustainability, MDPI, vol. 15(7), pages 1-26, March.
    10. Liang, Guitian & Gu, Chaocheng, 2021. "The value of target sales rebate contracts in a supply chain with downstream competition," International Journal of Production Economics, Elsevier, vol. 242(C).
    11. M. Masanta & B. C. Giri, 2022. "A manufacturing–remanufacturing supply chain model with learning and forgetting in inspection under consignment stock agreement," Operational Research, Springer, vol. 22(4), pages 4093-4117, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    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. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    3. He, Peng & He, Yong & Xu, Henry, 2019. "Channel structure and pricing in a dual-channel closed-loop supply chain with government subsidy," International Journal of Production Economics, Elsevier, vol. 213(C), pages 108-123.
    4. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    5. Matsui, Kenji, 2023. "Dual-recycling channel reverse supply chain design of recycling platforms under acquisition price competition," International Journal of Production Economics, Elsevier, vol. 259(C).
    6. Liu, Zhuojun & Diallo, Claver & Chen, Jing & Zhang, Michael, 2020. "Optimal pricing and production strategies for new and remanufactured products under a non-renewing free replacement warranty," International Journal of Production Economics, Elsevier, vol. 226(C).
    7. Zhang, Yunrong & Hong, Zhaofu & Chen, Zhixiang & Glock, Christoph H., 2020. "Tax or subsidy? Design and selection of regulatory policies for remanufacturing," European Journal of Operational Research, Elsevier, vol. 287(3), pages 885-900.
    8. Haitao Chen & Zhaohui Dong & Gendao Li & Hetian Zhao, 2020. "Joint Advertisement and Trade-In Marketing Strategy in Closed-Loop Supply Chain," Sustainability, MDPI, vol. 12(6), pages 1-17, March.
    9. Tahirov, Nail & Glock, Christoph H., 2022. "Manufacturer encroachment and channel conflicts: A systematic review of the literature," European Journal of Operational Research, Elsevier, vol. 302(2), pages 403-426.
    10. Wen, Danping & Xiao, Tiaojun & Dastani, Mehdi, 2021. "Channel choice for an independent remanufacturer considering environmentally responsible consumers," International Journal of Production Economics, Elsevier, vol. 232(C).
    11. Kleber, Rainer & Reimann, Marc & Souza, Gilvan C. & Zhang, Weihua, 2020. "Two-sided competition with vertical differentiation in both acquisition and sales in remanufacturing," European Journal of Operational Research, Elsevier, vol. 284(2), pages 572-587.
    12. Suvadarshini, Pinakhi & Biswas, Indranil & Srivastava, Samir K., 2023. "Impact of reverse channel competition, individual rationality, and information asymmetry on multi-channel closed-loop supply chain design," International Journal of Production Economics, Elsevier, vol. 259(C).
    13. You Qiu & Youliang Jin, 2022. "Impact of environmental taxes on remanufacturing decisions of a duopoly," Economic Change and Restructuring, Springer, vol. 55(4), pages 2479-2498, November.
    14. Zhang, Guangxia & Gong, Yeming & Hong, Xianpei, 2022. "Free rider effect of quality information disclosure in remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    15. He, Qidong & Wang, Nengmin & Yang, Zhen & He, Zhengwen & Jiang, Bin, 2019. "Competitive collection under channel inconvenience in closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 275(1), pages 155-166.
    16. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    17. Deepak Singhal & Sarat Kumar Jena & Satyabrata Aich & Sushanta Tripathy & Hee-Cheol Kim, 2021. "Remanufacturing for Circular Economy: Understanding the Impact of Manufacturer’s Incentive under Price Competition," Sustainability, MDPI, vol. 13(21), pages 1-19, October.
    18. Yuqing Hu & Lijun Meng & Zuqing Huang, 2023. "Pricing and Sales Effort Decisions in a Closed-Loop Supply Chain Considering the Network Externality of Remanufactured Product," Sustainability, MDPI, vol. 15(7), pages 1-26, March.
    19. Tianqin Shi & Dilip Chhajed & Zhixi Wan & Yunchuan Liu, 2020. "Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1702-1719, July.
    20. Tong Shu & Qian Liu & Shou Chen & Shouyang Wang & Kin Keung Lai, 2018. "Pricing Decisions of CSR Closed-Loop Supply Chains with Carbon Emission Constraints," Sustainability, MDPI, vol. 10(12), pages 1-25, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:232:y:2021:i:c:s0925527320302887. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.