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Pricing and warranty decisions in a two-period closed-loop supply chain

Author

Listed:
  • Juan Tang
  • Bang-Yi Li
  • Kevin W. Li
  • Zhi Liu
  • Jun Huang

Abstract

For a two-period closed-loop supply chain (CLSC) consisting of a manufacturer and a retailer, Stackelberg game analyses are conducted to examine pricing and warranty decisions under two warranty models depending on who offers warranty for new and remanufactured products and the corresponding benchmark models with a warranty for new products only. Next, we identify the conditions under which warranty for remanufactured products is offered and investigate how this warranty affects the CLSC operations. Subsequently, comparative studies are carried out to examine equilibrium decisions, profitability and consumer surplus of the CLSC between the two warranty models. Analytical results show that offering warranty for remanufactured products does not affect new product pricing in period 2, but influences the pricing of new products in period 1 and remanufactured products in period 2, thereby enhancing remanufacturing, individual and channel profitability, and consumer surplus. Compared to the retailer warranty for remanufactured products, the manufacturer warranty can attain a more equitable profit distribution. If the warranty cost advantage of the manufacturer (retailer) is significant relative to that of the retailer (the manufacturer), the manufacturer (retailer) arises as a natural choice to offer warranty for remanufactured products as this decision enhances both profitability and consumer surplus.

Suggested Citation

  • Juan Tang & Bang-Yi Li & Kevin W. Li & Zhi Liu & Jun Huang, 2020. "Pricing and warranty decisions in a two-period closed-loop supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 58(6), pages 1688-1704, March.
    • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:6:p:1688-1704
    DOI: 10.1080/00207543.2019.1683246
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    Citations

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    Cited by:

    1. Guo, Xiaolong & Zhou, Qiang & Bian, Junsong, 2022. "Online retailers’ platform-based Worry-Free-Shopping: Retailing strategy considering consumer valuation bias," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    2. Yuyan Wang & Zhaoqing Yu & Liang Shen & Runjie Fan & Rongyun Tang, 2021. "Decisions and Coordination in E-Commerce Supply Chain under Logistics Outsourcing and Altruistic Preferences," Mathematics, MDPI, vol. 9(3), pages 1-23, January.
    3. Changhong Li & Jialuo Wang & Yifan Shi, 2022. "The Impact of Government Intervention and Cap-and-Trade on Green Innovation in Supply Chains: A Social Welfare Perspective," Sustainability, MDPI, vol. 14(13), pages 1-18, June.
    4. Xianpei Hong & Xinlu Cao & Yeming Gong & Wanying (amanda) Chen, 2021. "Quality information acquisition and disclosure with green manufacturing in a closed-loop supply chain," Post-Print hal-03188234, HAL.
    5. 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.
    6. Quan, Yuting & Hong, Jiangtao & Song, Jingpu & Leng, Mingming, 2021. "Game-theoretic analysis of trade-in services in closed-loop supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    7. Yang, Feng & Wang, Manman & Ang, Sheng, 2021. "Optimal remanufacturing decisions in supply chains considering consumers’ anticipated regret and power structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    8. Yuyan Wang & Zhaoqing Yu & Liang Shen & Wenquan Dong, 2021. "E-Commerce Supply Chain Models under Altruistic Preference," Mathematics, MDPI, vol. 9(6), pages 1-19, March.
    9. Manyi Tan & Fei Pei & Li He & Hong Cheng & Shupeng Huang, 2023. "Optimal Decision-Making of Closed-Loop Supply Chains in E-Commerce Platform Considering Sales Cooperations under Environmental Effects and WEEE Regulations," IJERPH, MDPI, vol. 20(9), pages 1-28, May.
    10. Huang, Yeu-Shiang & Fang, Chih-Chiang & Lu, Chang-Ming & (Bill) Tseng, Tzu-Liang, 2022. "Optimal Warranty Policy for Consumer Electronics with Dependent Competing Failure Processes," Reliability Engineering and System Safety, Elsevier, vol. 222(C).
    11. Hong, Xianpei & Cao, Xinlu & Gong, Yeming & Chen, Wanying, 2021. "Quality information acquisition and disclosure with green manufacturing in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 232(C).
    12. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    13. Liu, Zhi & Li, Kevin W. & Tang, Juan & Gong, Bengang & Huang, Jun, 2021. "Optimal operations of a closed-loop supply chain under a dual regulation," International Journal of Production Economics, Elsevier, vol. 233(C).
    14. Alegoz, Mehmet & Kaya, Onur & Bayindir, Z. Pelin, 2021. "A comparison of pure manufacturing and hybrid manufacturing–remanufacturing systems under carbon tax policy," European Journal of Operational Research, Elsevier, vol. 294(1), pages 161-173.

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