Optimal Stackelberg Strategies for Closed Loop Supply Chain with Third Party Reverse Logistics
Closed loop supply chain (CLSC) especially the reverse logistics system with the third party reverse logistics providers (3PRLP) is very important for materials return, remanufacturing, repair, recovery, recycling, and reusing. In this paper, based on a one leader and multi follower Stackelberg game with the manufacturer being the leader, we model a multi echelon CLSC with 3PRLP under the consideration of impacts of environmental legislation on scrap recycling. Furthermore, in order to encourage the 3PRLP to exert him to return activities we design a target rebate punish contract between the manufacturer and the 3PRLP under both stochastic price dependent demands and stochastic effort dependent returns. We analyze the closed form analytic expressions for both united optimization strategies in centralized closed loop system and the Stackelberg strategies in decentralized system, and conclude that the wholesale price contract may not coordinate the forward supply chain and the target rebate punish may coordinate the reverse chain under certain conditions. Finally, according to the practice of Chinese steel enterprises we carry out some simulation experiments to validate our theoretical analyses and gain some insights into the impacts of reverse logistics activities on the practitioners operations and decisions.
Asia Pac. J. Oper. Res.