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A Coordinated Revenue-Sharing Model for a Sustainable Closed-Loop Supply Chain

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  • Hao Zou

    (School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China
    School of Business Administration, Hunan University of Finance and Economics, Changsha 410205, China)

  • Jin Qin

    (School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China)

  • Peng Yang

    (School of Business Administration, Hunan University of Finance and Economics, Changsha 410205, China)

  • Bo Dai

    (Laboratoire d’optimisation des Systeme Industriels, Institut Charles Delaunay and UMR CNRS 6281, Universite de Technologie de Troyes, 12 Rue Marie Curie, CS 42060, 10004 Troyes CEDEX, France)

Abstract

This study takes a sustainable closed-loop supply chain composed of one manufacturer and two price-competitive retailers as the object and considers the two-way risk aversion characteristics of manufacturers and retailers in examining the coordination mechanism in a closed-loop supply chain. Using game theory, optimal decision-making on wholesale prices, retail prices, and recycling prices are explored under decentralized and centralized decision-making scenarios, and representative expressions are established. By analyzing the effects of the risk aversion coefficient on players’ optimal strategies, we found that the manufacturer’s and retailers’ risk aversion coefficients have different effects on the wholesale price, retail price, and recycling price under decentralized decision-making, while in a centralized decision-making scenario, the effects are the same. The comparison also found that the wholesale price and recovery price under the centralized decision-making scenario are higher than those under decentralized decision-making. To achieve closed-loop supply chain coordination, we propose a revenue-sharing contract that we demonstrate by coordinating price competition with risk aversion and analyze a range of parameters that influence the revenue-sharing contract. The results show that the proposed contract can increase the profits of supply chain members by identifying the optimal revenue-sharing ratio.

Suggested Citation

  • Hao Zou & Jin Qin & Peng Yang & Bo Dai, 2018. "A Coordinated Revenue-Sharing Model for a Sustainable Closed-Loop Supply Chain," Sustainability, MDPI, vol. 10(9), pages 1-15, September.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:9:p:3198-:d:168329
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    References listed on IDEAS

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    3. Xiaodong Zhu & Lingfei Yu, 2019. "The Impact of Warranty Efficiency of Remanufactured Products on Production Decisions and Green Growth Performance in Closed-Loop Supply Chain: Perspective of Consumer Behavior," Sustainability, MDPI, vol. 11(5), pages 1-24, March.
    4. Luttiely Santos Oliveira & Ricardo Luiz Machado, 2021. "Application of optimization methods in the closed-loop supply chain: a literature review," Journal of Combinatorial Optimization, Springer, vol. 41(2), pages 357-400, February.
    5. 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.
    6. Hao Zou & Jin Qin & Xiaofeng Long, 2022. "Coordination Decisions for a Low-Carbon Supply Chain Considering Risk Aversion under Carbon Quota Policy," IJERPH, MDPI, vol. 19(5), pages 1-24, February.

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