The Price Of Anarchy In Reverse/Closed-Loop Supply Chains

As the academic research on reverse and closed-loop supply chains is going deeper and wider,some approaches linkimg up with the modern operations management,such as contracting and game theory,have taken up very important positions in the coordination of reverse systems.Price-only contract is observed to be very commonly used in the practical supply-chain transactions because of its simplicity and lower costs related to administration and negotiation.However,simplicity is at the cost of “double-marginalization” that brings efficiency loss to the system.Apart from such abudent literature coordinates the reverse and closed-loop supply chains though the design of sophisticated contracts,my research concentrates on quantifying and analyzing the efficiency problems of simple contracts,i.e.,the price-only contracts in reverse and closed-loop supply chains.According to the existing literature evaluates the performance of forward supply chains,the price of anarchy(PoA)is defined as an upper bound of the ratio of the optimal social utility and the worst Nash equilibrium between centralizing and decentralizing operations.Therefore,my dissertation firstly uses PoA to discuss the efficiency problems of reverse and closed-loop supply chains with a full consideration of the characteristics of reverse logistics,which shed a light on the study of the effect of double-marginalization in the supply chains involving reverse logistics.After that,the PoA is measured in a broader way with novel definition and proof techniques.The research consists of four main sections:(1)Analysis of the Po A for serial reverse supply chains.In this section,I first consider a two-stage monopoly supply chain consisting of a remanufacturer and a collecter facing with the uncertainty from the consumers' return of used products.The upper bounds of efficiency loss in decentralized reverse supply chains are derived under push-pull configuration.Then,the model is expanded to a multi-stage following with a numerical study to verify the conclusions.The results show that a reverse supply chain is not just the “reverse” of a forward supply chain and the PoA in a decentralized reverse supply chain proves to be constant for both push and pull configurations.That is to say,which member bears the supply stockout risk has no influence on the efficiency loss of the system.Besides,the efficiency generally drops with the increasing number of intermediaries in reverse supply chains.(2)Analysis of the PoA for reverse supply chains with horizontal competition.Based on the research of the serial models,this section carries out a comprehensive investigation on the effect of unilateral or bilateral horizontal competition among remanufacturers and collectors on system efficiency with push or pull strategy.Given the uncertainty in the returns of used products,I also consider different consumers' return behaviors when facing competitive collectors and investigate the effect of the quality levels of used products.I clarify the effect of horizontal competition for each scenario and find distinctive features of reverse supply chains that differentiate them from traditional forward activities.Additional managerial insights are provided for discussion.(3)Analysis of the PoA for closed-loop supply chains under different reverse channel structures.Based on models in the reverse systems,this section considers a single manufacturer sells new products to a single retailer and collects used products via three alternative channels: 1)the manufacturer collects used products directly from customers;2)the retailer collects used products for the manufacturer;and 3)a third-party is awarded a subcontract by the manufacturer to collect used products.It provides a systematic analysis of how the reverse channel structures influence the performance of adopting price-only contracts dependent on the quality levels of used products in decentralized closed-loop supply chains.I discuss push-pull configurations with different action sequences of game played among supply chain members and analyze the effect of quality levels of used products on the upper bounds of inefficiency.The results provide some useful managerial insights through thorough comparions among those various scenarios,as well as with the forward and reverse supply chains.(4)Analysis of the efficiency of a manufacturer's different recovery strategies when in the face of competitive new and remanufactured products.This section is an extension of the former research by using novel definition and proof methods of the price of anarchy.A manufacturer can choose whether to adopt a remanufacturing strategy.The PoA stands for system efficiency loss is defined as the welfare ratio between a monopoly remanufacturing strategy conducted by the manufacturer and a competitive option to remanufacture by an entrant.The Cournot competition among differentiated new and remanufactured products is characterized following the theorems from matrix analysis and the upper bound of welfare loss is developed by the eigenvalues of coefficient matrix.This section prepares for some more comprehensive future studies in every sense.This research serves as a well-organized supplement to the theory of Price of Anarchy in supply chain management.The upper bound of efficiency loss for decentralized reverse supply chains with different stuctures and decentralized closed-loop supply chains under various settings is defined and measured.It also explores more comprehensive applications and more general research methods of the PoA for reverse systems.On the other hand,in practice,this research verifies the popularity of simple contract,i.e.,price-only contract,in transactions is science based,and provides theoretical reference for decision makers when balancing the supply chain performance and the management and negotiation cost.