Reverse and closed loop supply chain coordination by considering government role

TLDR: In this article, a two-echelon reverse supply chain (RSC) with one manufacturer and one retailer who try to improve sustainable consumption by increasing customers' willingness to return used products through offering a discount or a direct fee in exchange for bringing back EOL products was considered.

Abstract: Due to the increasing number of end-of-life (EOL) products and their related environmental concerns, much attention has been paid to reverse logistics. In this paper, we consider a two-echelon reverse supply chain (RSC) with one manufacturer and one retailer who try to improve sustainable consumption by increasing customers’ willingness to return used products through offering a discount or a direct fee in exchange for bringing back EOL products. Afterward, the model is extended to consider a closed loop supply chain (CLSC). Quantity discounts and increasing fee contracts are proposed to coordinate supply chains. Then, government role in improving coordinated supply chains through donating different incentives (tax exemption and subsidy) to supply chain members are analyzed. Results show that total channel profit in the coordinated case is improved. Also, in the proposed models, each member has enough motives to participate in the plan. In addition, results demonstrate that government-sponsored incentives to the manufacturer are preferred to the retailer.