IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v122y2024ics0305048323001019.html
   My bibliography  Save this article

A subsidized reverse supply chain in the Chinese electronics industry

Author

Listed:
  • Zhang, Yanzi
  • Berenguer, Gemma
  • Zhang, Zhi-Hai

Abstract

We study a special environmental producer responsibility policy for the Chinese electronics industry that is based on awarding a per unit subsidy to qualified returned electronic products and ensuring a minimum producer collection volume while allowing larger collection volumes. Based on a real application from a Chinese electronics company that produces LCD TVs, our paper studies the optimal design of the product’s reverse supply chain when there is flexibility in settling the inspection locations of the returned products and flexibility in the volume of returned products collected. The problem is modeled as a nonlinear mixed-integer program and an efficient outer approximation-based solution approach is proposed. Analytical results and extensive numerical experiments based on this real application are conducted. Observations novel to the reverse logistics literature are related to the testing location decisions (upstream or downstream) and the optimal collection volumes of returned products. Particularly, we show how the government can stimulate the collection amount of returned products by increasing the unit subsidy and we also find that the company’s marginal benefit from improving the subsidy increases in a superlinear fashion. Furthermore, the highest collection volumes may not occur at the highest quality level of returned products for capacitated remanufacturers. The company can also be incentivized to increase the collection of returned products by permitting flexible testing locations. We also observe how the optimal testing locations vary for different levels of unit subsidy and different ratios of qualified and non-qualified returned products. Finally, conclusions and future research directions are provided.

Suggested Citation

  • Zhang, Yanzi & Berenguer, Gemma & Zhang, Zhi-Hai, 2024. "A subsidized reverse supply chain in the Chinese electronics industry," Omega, Elsevier, vol. 122(C).
    • Handle: RePEc:eee:jomega:v:122:y:2024:i:c:s0305048323001019
    DOI: 10.1016/j.omega.2023.102937
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305048323001019
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2023.102937?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. Wu, Cheng-Han, 2021. "A dynamic perspective of government intervention in a competitive closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 294(1), pages 122-137.
    2. Ma, Wei-min & Zhao, Zhang & Ke, Hua, 2013. "Dual-channel closed-loop supply chain with government consumption-subsidy," European Journal of Operational Research, Elsevier, vol. 226(2), pages 221-227.
    3. Akshay Mutha & Saurabh Bansal & V. Daniel R. Guide, 2016. "Managing Demand Uncertainty through Core Acquisition in Remanufacturing," Production and Operations Management, Production and Operations Management Society, vol. 25(8), pages 1449-1464, August.
    4. Zhou, Li & Naim, Mohamed M. & Disney, Stephen M., 2017. "The impact of product returns and remanufacturing uncertainties on the dynamic performance of a multi-echelon closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 487-502.
    5. Halit Üster & Sung Ook Hwang, 2017. "Closed-Loop Supply Chain Network Design Under Demand and Return Uncertainty," Transportation Science, INFORMS, vol. 51(4), pages 1063-1085, November.
    6. Zhang, Ying & Snyder, Lawrence V. & Qi, Mingyao & Miao, Lixin, 2016. "A heterogeneous reliable location model with risk pooling under supply disruptions," Transportation Research Part B: Methodological, Elsevier, vol. 83(C), pages 151-178.
    7. Liu, Huihui & Lei, Ming & Deng, Honghui & Keong Leong, G. & Huang, Tao, 2016. "A dual channel, quality-based price competition model for the WEEE recycling market with government subsidy," Omega, Elsevier, vol. 59(PB), pages 290-302.
    8. Srivastava, Samir K., 2008. "Network design for reverse logistics," Omega, Elsevier, vol. 36(4), pages 535-548, August.
    9. Yanzi Zhang & Zhi-Hai Zhang, 2019. "Impact of the cannibalization effect between new and remanufactured products on supply chain design and operations," IISE Transactions, Taylor & Francis Journals, vol. 51(1), pages 22-40, January.
    10. Ravi Subramanian & Ramanath Subramanyam, 2012. "Key Factors in the Market for Remanufactured Products," Manufacturing & Service Operations Management, INFORMS, vol. 14(2), pages 315-326, April.
    11. Mohammad Fattahi & Kannan Govindan, 2017. "Integrated forward/reverse logistics network design under uncertainty with pricing for collection of used products," Annals of Operations Research, Springer, vol. 253(1), pages 193-225, June.
    12. Niknejad, A. & Petrovic, D., 2014. "Optimisation of integrated reverse logistics networks with different product recovery routes," European Journal of Operational Research, Elsevier, vol. 238(1), pages 143-154.
    13. Mark Daskin & Collette Coullard & Zuo-Jun Shen, 2002. "An Inventory-Location Model: Formulation, Solution Algorithm and Computational Results," Annals of Operations Research, Springer, vol. 110(1), pages 83-106, February.
    14. Kristin Sahyouni & R. Canan Savaskan & Mark S. Daskin, 2007. "A Facility Location Model for Bidirectional Flows," Transportation Science, INFORMS, vol. 41(4), pages 484-499, November.
    15. Liao, Haolan & Zhang, Qingyu & Li, Lu, 2023. "Optimal procurement strategy for multi-echelon remanufacturing systems under quality uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    16. Santos, Maria João & Jorge, Diana & Ramos, Tânia & Barbosa-Póvoa, Ana, 2023. "Green reverse logistics: Exploring the vehicle routing problem with deliveries and pickups," Omega, Elsevier, vol. 118(C).
    17. Chen, Wenyi & Kucukyazici, Beste & Verter, Vedat & Jesús Sáenz, María, 2015. "Supply chain design for unlocking the value of remanufacturing under uncertainty," European Journal of Operational Research, Elsevier, vol. 247(3), pages 804-819.
    18. Claver Diallo & Uday Venkatadri & Abdelhakim Khatab & Sriram Bhakthavatchalam, 2017. "State of the art review of quality, reliability and maintenance issues in closed-loop supply chains with remanufacturing," International Journal of Production Research, Taylor & Francis Journals, vol. 55(5), pages 1277-1296, March.
    19. Teunter, Ruud H., 2006. "Determining optimal disassembly and recovery strategies," Omega, Elsevier, vol. 34(6), pages 533-537, December.
    20. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen & Ge, Ying-En & Shu, Jia, 2022. "Subsidies for green technology adoption under uncertain demand and incomplete information," Omega, Elsevier, vol. 112(C).
    21. Lu Zhen & Qiuji Sun & Kai Wang & Xiaotian Zhang, 2019. "Facility location and scale optimisation in closed-loop supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 57(24), pages 7567-7585, December.
    22. Hauck, Zsuzsanna & Rabta, Boualem & Reiner, Gerald, 2021. "Joint quality and pricing decisions in lot sizing models with defective items," International Journal of Production Economics, Elsevier, vol. 241(C).
    23. Hamed Soleimani & Prem Chhetri & Amir M. Fathollahi-Fard & S. M. J. Mirzapour Al-e-Hashem & Shahrooz Shahparvari, 2022. "Sustainable closed-loop supply chain with energy efficiency: Lagrangian relaxation, reformulations and heuristics," Annals of Operations Research, Springer, vol. 318(1), pages 531-556, November.
    24. Sheu, Jiuh-Biing & Gao, Xiao-Qin, 2014. "Alliance or no alliance—Bargaining power in competing reverse supply chains," European Journal of Operational Research, Elsevier, vol. 233(2), pages 313-325.
    25. 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.
    26. 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.
    27. Kaiying Cao & Ping He & Zhixin Liu, 2020. "Production and pricing decisions in a dual-channel supply chain under remanufacturing subsidy policy and carbon tax policy," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(8), pages 1199-1215, August.
    28. James D. Abbey & Rainer Kleber & Gilvan C. Souza & Guido Voigt, 2017. "The Role of Perceived Quality Risk in Pricing Remanufactured Products," Production and Operations Management, Production and Operations Management Society, vol. 26(1), pages 100-115, January.
    29. Zhi-Hai Zhang & Gemma Berenguer & Xiaoyong Pan, 2019. "Location, inventory and testing decisions in closed-loop supply chains: A multimedia company," IISE Transactions, Taylor & Francis Journals, vol. 51(1), pages 41-56, January.
    30. Simonetto, Marco & Sgarbossa, Fabio & Battini, Daria & Govindan, Kannan, 2022. "Closed loop supply chains 4.0: From risks to benefits through advanced technologies. A literature review and research agenda," International Journal of Production Economics, Elsevier, vol. 253(C).
    31. Pedro Piñeyro & Omar Viera, 2022. "The economic lot-sizing problem with remanufacturing and heterogeneous returns: formulations, analysis and algorithms," International Journal of Production Research, Taylor & Francis Journals, vol. 60(11), pages 3521-3533, June.
    32. Ebrahimi, Sajad & Haji Esmaeili, Seyed Ali & Sobhani, Ahmad & Szmerekovsky, Joseph, 2022. "Renewable jet fuel supply chain network design: Application of direct monetary incentives," Applied Energy, Elsevier, vol. 310(C).
    33. Bimal Kumar Mawandiya & J. K. Jha & Jitesh J. Thakkar, 2020. "Optimal production-inventory policy for closed-loop supply chain with remanufacturing under random demand and return," Operational Research, Springer, vol. 20(3), pages 1623-1664, September.
    34. Diabat, Ali & Jebali, Aida, 2021. "Multi-product and multi-period closed loop supply chain network design under take-back legislation," International Journal of Production Economics, Elsevier, vol. 231(C).
    35. Zuo-Jun Max Shen & Collette Coullard & Mark S. Daskin, 2003. "A Joint Location-Inventory Model," Transportation Science, INFORMS, vol. 37(1), pages 40-55, February.
    36. Duong, Quang Huy & Zhou, Li & Meng, Meng & Nguyen, Truong Van & Ieromonachou, Petros & Nguyen, Duy Tiep, 2022. "Understanding product returns: A systematic literature review using machine learning and bibliometric analysis," International Journal of Production Economics, Elsevier, vol. 243(C).
    37. Arabi, Mahsa & Gholamian, Mohammad Reza, 2023. "Resilient closed-loop supply chain network design considering quality uncertainty: A case study of stone quarries," Resources Policy, Elsevier, vol. 80(C).
    38. Tian, Xiaoyu & Zhang, Zhi-Hai, 2019. "Capacitated disassembly scheduling and pricing of returned products with price-dependent yield," Omega, Elsevier, vol. 84(C), pages 160-174.
    39. Govindan, Kannan & Soleimani, Hamed & Kannan, Devika, 2015. "Reverse logistics and closed-loop supply chain: A comprehensive review to explore the future," European Journal of Operational Research, Elsevier, vol. 240(3), pages 603-626.
    40. Aksen, Deniz & Aras, Necati & Karaarslan, Ayse Gönül, 2009. "Design and analysis of government subsidized collection systems for incentive-dependent returns," International Journal of Production Economics, Elsevier, vol. 119(2), pages 308-327, June.
    41. Teunter, Ruud H. & Flapper, Simme Douwe P., 2011. "Optimal core acquisition and remanufacturing policies under uncertain core quality fractions," European Journal of Operational Research, Elsevier, vol. 210(2), pages 241-248, April.
    42. 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).
    43. K. Nageswara Reddy & Akhilesh Kumar & Erica E. F. Ballantyne, 2019. "A three-phase heuristic approach for reverse logistics network design incorporating carbon footprint," International Journal of Production Research, Taylor & Francis Journals, vol. 57(19), pages 6090-6114, October.
    44. Jeihoonian, Mohammad & Kazemi Zanjani, Masoumeh & Gendreau, Michel, 2016. "Accelerating Benders decomposition for closed-loop supply chain network design: Case of used durable products with different quality levels," European Journal of Operational Research, Elsevier, vol. 251(3), pages 830-845.
    45. Reddy, K. Nageswara & Kumar, Akhilesh & Choudhary, Alok & Cheng, T. C. Edwin, 2022. "Multi-period green reverse logistics network design: An improved Benders-decomposition-based heuristic approach," European Journal of Operational Research, Elsevier, vol. 303(2), pages 735-752.
    46. V. Daniel R. Guide, Jr. & Ruud H. Teunter & Luk N. Van Wassenhove, 2003. "Matching Demand and Supply to Maximize Profits from Remanufacturing," Manufacturing & Service Operations Management, INFORMS, vol. 5(4), pages 303-316, October.
    47. Chen, Rui & Meng, Qiang & Yu, Jiayi Joey, 2023. "Optimal government incentives to improve the new technology adoption: Subsidizing infrastructure investment or usage?," Omega, Elsevier, vol. 114(C).
    48. Rahman, Shams & Subramanian, Nachiappan, 2012. "Factors for implementing end-of-life computer recycling operations in reverse supply chains," International Journal of Production Economics, Elsevier, vol. 140(1), pages 239-248.
    Full references (including those not matched with items on IDEAS)

    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. Gong, Hailei & Zhang, Zhi-Hai, 2022. "Benders decomposition for the distributionally robust optimization of pricing and reverse logistics network design in remanufacturing systems," European Journal of Operational Research, Elsevier, vol. 297(2), pages 496-510.
    2. Van Engeland, Jens & Beliën, Jeroen & De Boeck, Liesje & De Jaeger, Simon, 2020. "Literature review: Strategic network optimization models in waste reverse supply chains," Omega, Elsevier, vol. 91(C).
    3. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    4. Yue Tan & Chunxiang Guo, 2019. "Research on Two-Way Logistics Operation with Uncertain Recycling Quality in Government Multi-Policy Environment," Sustainability, MDPI, vol. 11(3), pages 1-18, February.
    5. Zhang, Yanzi & Diabat, Ali & Zhang, Zhi-Hai, 2021. "Reliable closed-loop supply chain design problem under facility-type-dependent probabilistic disruptions," Transportation Research Part B: Methodological, Elsevier, vol. 146(C), pages 180-209.
    6. Patricia van Loon & Luk N. Van Wassenhove & Ales Mihelic, 2022. "Designing a circular business strategy: 7 years of evolution at a large washing machine manufacturer," Business Strategy and the Environment, Wiley Blackwell, vol. 31(3), pages 1030-1041, March.
    7. Reddy, K. Nageswara & Kumar, Akhilesh & Choudhary, Alok & Cheng, T. C. Edwin, 2022. "Multi-period green reverse logistics network design: An improved Benders-decomposition-based heuristic approach," European Journal of Operational Research, Elsevier, vol. 303(2), pages 735-752.
    8. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    9. 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.
    10. Matsui, Kenji, 2022. "Optimal timing of acquisition price announcement for used products in a dual-recycling channel reverse supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 615-632.
    11. 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).
    12. 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.
    13. Liao, Haolan & Zhang, Qingyu & Li, Lu, 2023. "Optimal procurement strategy for multi-echelon remanufacturing systems under quality uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    14. Maiti, T. & Giri, B.C., 2017. "Two-way product recovery in a closed-loop supply chain with variable markup under price and quality dependent demand," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 259-272.
    15. Hong Sun & Yan Li, 2023. "Optimal Acquisition and Production Policies for Remanufacturing with Quality Grading," Mathematics, MDPI, vol. 11(7), pages 1-21, March.
    16. Phantratanamongkol, Supanan & Casalin, Fabrizio & Pang, Gu & Sanderson, Joseph, 2018. "The price-volume relationship for new and remanufactured smartphones," International Journal of Production Economics, Elsevier, vol. 199(C), pages 78-94.
    17. Chu, Xiang & Wang, Rui & Lin, Yan & Li, Yantong, 2022. "Building trust in online trade-in programs with a blockchain-enabled system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).
    18. Hao Guo & Ying Zhang & Chunnan Zhang & Yu Liu & Yuan Zhou, 2020. "Location-inventory decisions for closed-loop supply chain management in the presence of the secondary market," Annals of Operations Research, Springer, vol. 291(1), pages 361-386, August.
    19. Yang Hu, 2023. "Perspectives in closed-loop supply chains network design considering risk and uncertainty factors," Papers 2306.04819, arXiv.org.
    20. Zikopoulos, Christos, 2022. "On the effect of upgradable products design on circular economy," International Journal of Production Economics, Elsevier, vol. 254(C).

    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:jomega:v:122:y:2024:i:c:s0305048323001019. 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/wps/find/journaldescription.cws_home/375/description#description .

    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.