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Coordination of closed-loop supply chain considering loss-aversion and remanufactured products quality control

  • S.I. : OR for Sustainability in Supply Chain Management
  • Published:
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A Correction to this article was published on 31 March 2022

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Abstract

The closed-loop supply chain has been receiving increasing attention in recent years. Supply chain coordination and remanufactured products quality control are two fundamental factors for the closed-loop supply chain to obtain a competitive advantage. Besides, fierce competition brings more uncertainty to the market demand. Supply chain members tend to show the characteristics of loss aversion, which could affect them in making quality decisions. Therefore, this paper attempts to coordinate the closed-loop supply chain under remanufactured products quality control with a loss-averse manufacturer and a loss-averse retailer. Under remanufactured product quality control, expected utility function of manufacturers and retailers are established under centralized decision and decentralized decision respectively. According to the principle of utility maximization, the optimal choices of manufacturers and retailers are obtained. Further, by analyzing and comparing the optimal decisions in decentralized and centralized cases, it is found that the closed-loop supply chain cannot achieve coordination. Therefore, the wholesale price and the quality cost-sharing contract are introduced which is proved to be able to harmonize the supply chain. Finally, the impacts of the parameters change on the optimal quality level and remanufactured product price under two typical decision structures are presented through the sensitivity analysis.

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Acknowledgements

This work is supported by the National Natural Sciences Foundation of China under Grant NSFC71871017.

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Authors and Affiliations

  1. School of Management, Tianjin University of Commerce, Tianjin, 300134, China

    Chao Zhao

  2. School of Economics and Management, University of Science and Technology Beijing, Beijing, 100083, China

    Daoping Wang

  3. Department of Management Sciences, Mohi-Ud-Din Islamic University, Nerian Sharif, AJ&K, 12081, Pakistan

    Amjad Younas

  4. China Center for Information Industry Development, Beijing, 100048, China

    Boqing Zhang

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  1. Chao Zhao
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  2. Daoping Wang
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Correspondence to Chao Zhao.

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Zhao, C., Wang, D., Younas, A. et al. Coordination of closed-loop supply chain considering loss-aversion and remanufactured products quality control. Ann Oper Res (2022). https://doi.org/10.1007/s10479-022-04619-1

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