Study On Investment And Operation Strategies Of A Closed-Loop Supply Chain Based On Process Innovation For Remanufacturing

The development of circular economy is an important path to achieve the national goal of “carbon peaking” and “carbon neutrality”.Remanufacturing is the focus of the circular economy.However,although remanufacturing can bring the benefits of lower production costs and lower carbon emissions for firms,industries such as electric vehicles are facing remanufacturing process management issues such as dismantling of used products and immature remanufacturing technologies.Process Innovation for Remanufacturing(PIR)is an important way to efficiently manage the remanufacturing process and solve the recycling technical problems.For example,firms in the EV supply chain such as BYD,Tesla,CATL and GEM have made substantial investments in PIR to increase the efficiency of power battery recycling.Although PIR has been implemented in practice,there is a lack of systematic theoretical guidance and decision-making basis on how to develop optimal PIR investment strategies and make scientific operational decisions on production and pricing under PIR in a complex operational context.The supply chain involving PIR is facing many challenges.On the one hand,the supply chain operation decisions under PIR strategy become more complex.On the other hand,PIRbased remanufacturing plays a vital role in cutting production costs,recycling materials and reducing energy usage.The complexity of the supply chain operation scenarios is further exacerbated when considering the upgrading of product quality due to changes in cost structure,the alleviation of capacity limited through resource recycling,and the capand-trade associated with energy saving and emission reduction.Although the operational management of remanufacturing closed-loop supply chains(CLSC)has received a lot of attention in the literature,the research on the operation management of CLSC involving PIR decision-making is lacking.Based on this,this dissertation uses the methods of game theory and optimization theory to consider a comprehensive study framework of PIR from the perspectives of three supply chain stakeholders,including firm,rival and the government,and incorporates factors like Product Quality Upgrading,Capacity Limited and Cap-and-Trade.This dissertation systematically studies how the upstream and downstream firms make the optimal PIR investment strategy under the complex operation background,and how to make operational decisions such as production and pricing under PIR.The main points and conclusions of this dissertation are as follows:First,several PIR investment models under CLSC as well as operational methods including production and pricing are investigated.Stackelberg model,in which PIR is invested by the supplier or manufacturer alone or jointly by upstream and downstream enterprises,is developed as the basic model for this dissertation,taking into account a CLSC structure with one supplier and one manufacturer.The optimal PIR investment strategy in a CLSC is analyzed.The main findings demonstrate,firstly,that PIR can successfully boost recovery rates while improving remanufacturing performance.Second,while the co-investment model is always advantageous to the supplier,the entire supply chain and the environment,it might be disadvantageous to the manufacturer.It is suggested that the government adopt the recycling subsidy policy to encourage upstream and downstream firms to pick the co-investment model because it is good for the environment and the supply chain.Second,it is extended from the firm’s standpoint to investigate the optimal PIR investment and operational decisions in a CLSC when taking into account product quality upgrading.Three models of the interactions between PIR investment and product quality upgrading are developed for each of the two main supply chain power structures,taking into account differences in PIR investment efficiency.The optimal PIR investment strategy under different power structures is analyzed.The results indicate that firms do not always profit the most from a structure in which they are the Stackelberg leader and that joint PIR investment contract are undertaken when both upstream and downstream firms are relatively inefficient in their PIR investments.This dissertation provides managerial insights for upstream and downstream firms to make PIR investment strategies when considering differences in PIR investment efficiency under different power structures.Again,the study framework is extended to incorporate a competitor’s perspective on capacity limited in order to investigate the optima PIR investment strategy and operating decisions in a competitive setting.Given that the incumbent faces capacity limited and conducts PIR investment,and that the new entrant faces the strategic decisions of whether to source components from the incumbent and invest in PIR in cooperation with it.Three models of duopoly competition are constructed: Non-cooperation,Loose-cooperation and Formal-cooperation.The optimal PIR investment strategy and procurement strategy are analyzed when firms are faced with capacity limited in a competitive environment.The results indicate that when capacity is not particularly low and the competitive intensity is low,the new entrant always sources from the incumbent and always prefers the Formalcooperation model.Moreover,the optimal strategy preference of the two firms may diverge when the market competitive is intense,and it is advised that additional contracts,such as revenue sharing,be utilized to align the strategic preferences of both firms to achieve Pareto improvement.Finally,the study framework is expanded by incorporating the government’s perspective on the cap-and-trade in order to investigate the optimal PIR investment and operation decisions in a CLSC.Two emission reduction models based on PIR investment collaboration are developed in consideration of a CLSC composed of a supplier and a manufacturer,with the supplier conducting PIR investment and the manufacturer conducting green technology innovation investment.The optimal PIR investment strategy under different emission reduction strategies is analyzed.The results indicate that when the price of carbon trading is low and the efficiency of PIR investment is poor,both upstream and downstream firms tend to choose a joint emission reduction strategy,which can result in a win-win situation for all parties.As the collaborative emission reduction approach is more environmentally friendly,it is suggested that the government should encourage upstream and downstream firms to adopt it by adjusting carbon emission control policies.The main contributions of this dissertation can be summarized as follows: Initially,it incorporates PIR into the research framework of CLSC operation management and investigates the optimal PIR investment strategy choice of upstream and downstream firms,thereby expanding the research scope of CLSC operation management and assisting firms in understanding and adopting PIR investment strategies.Second,a model of the interaction between product quality upgrading and PIR strategy is developed,enriching the research on the interaction between product quality upgrading and process innovation and providing a basis for firms to formulate PIR investment strategies under complex operational behaviors.Thirdly,combining the problem of capacity limited with PIR investment strategy in a competitive environment enriches cross-sectional research in the field of capacity limited and CLSC,broadens the application scenarios of PIR,and assists firms in formulating PIR investment strategy and procurement strategy when confronted with the problem of capacity limited in a competitive environment.Fourthly,the development of cooperative emission reduction models based on PIR investment for supply chains under the Cap-and-Trade mechanism enriches the cross-sectional research in the field of Cap-and-Trade mechanism and CLSC,and assists firms in understanding and adopting cooperative emission reduction strategies based on PIR investment under the cap-and-trade mechanism.