Pricing Strategy In The Closed-loop Supply Chain Management

This paper addresses issues related to management of closed-loop supply chains with remanufacturing. The challenge of remanufacturing used products into new ones and creating a value-added activity poses interesting and meaningful questions with respect to setting appropriate prices for both new products and remanufactured ones to maximize the profits of supply chain members as well as the system.In the light of the relatively new developments with regards to product recovery in the literature and in practice, we establish and research on a two-phase closed-loop supply chain model with only one manufacturer and one retailer. Based on analysis of reality, we discuss the topic in Chapter Three and Chapter Four respectively under the following two circumstances, that is, when the remanufactured products are entirely the same as new ones with respect to quality and price, and when these two types of products are sold at different prices. Under each circumstance, we focus on the optimal pricing decisions of supply chain members as decentralized decision-making system as well as centralized decision-making system and how to make price decisions for manufacturer to maximize system profits. The objective is to provide decision support in product pricing and contracts designing which are flexible in leading to win-to-win between the upstream and downstream channel members.After comparing optimal solutions of each model, we conclude that, prices and quantity of both remanufactured products and new products supply chain provides rely on the cost savings of remanufactured products, that is, in each condition there is a threshold, when cost savings is less than the threshold supply chain will provide both new products and remanufactured ones, otherwise, supply chain will only provide remanufactured products. On the other hand, manufacturer, as the leader, is able to coordinate the decentralized supply chain and control the profits division between upstream and downstream supply chain with flexibly setting the prices of remanufactured products and new products.