Production Mode and Pricing Strategy of a Two-period Closed-loop Supply Chain Considering Fairness Concerns

Abstract

Under the assumption of two-period closed-loop supply chain and based on the degree of manufacturers and retailers fairness concerns about the income in supply chain, this paper builds three models: without fairness concerns, only the retailer is concerned about fairness, and both channel members are concerned about fairness. Then it probes into the relationship between remanufacturing cost saving and the selection of different production modes, and presents the thresholds of remanufacturing cost saving for three models as well as the equilibrium pricing and optimum output of new products and remanufactured items in multi-period and different production modes. According to the result, all supply chain members showing high tendency of fairness concerns is extremely disadvantageous for the channel performance of closed-loop supply chain system. Finally, through some numerical examples, this paper analyzes the impact of remanufacturing cost saving and degree of fairness concerns on product output, price and optimal supply chain performance etc.