A Study Of The Remanufacturing Outsourcing Supply Chain Model Based On Risk Aversion

Nowadays, with the increasingly serious problem of resources and environment, countries around the world pay close attention to the recycling and disposal of waste products. In consideration of enterprise’s own strategic development, suppliers started to structure their own reverse supply chain to meet the demand of recycling and remanufacturing the waste products. However, because of the limitation of the manufacturer’s own development scale and economic capability, along with the uncertain market of waste products recycling, manufacturers have considerable difficulty in operating remanufacture. In recent years, outsourcing theory has been more and more applied to the construction of reverse supply chain. It also offers a new idea for the operation of remanufacture. Consequently, it is necessary to study on the third-party reverse supply chain of remanufacture.It is important to note that most of the studies on management problem of supply chain are based on the assumption that decision makers keep a neutral attitude toward risk. But, obviously, this assumption does not completely represent the decision makers’ attitudes toward all kinds of risk. The supply chain management will come across a more complex environment. There are great uncertainties of supply chain because of the dynamic demand, dynamic organization and dynamic management. In the face of the risks which made by these uncertainties, different corporate decision makers may have different attitudes. Therefore, the phenomenon that supply chain members have different risk preferences in decision making also should draw the attention of academic circle.Therefore, This paper mainly study the effect of risk aversion on the the supply chain members’ decision-making behaviour and income when outsourcing supply chain members avoid risk.Firstly, this paper researched on remanufacturing outsourcing supply chain model without considering the attitudes toward risk, taking the game theory as the basic research method to discuss Stackelberg strategies of supplier as leader, retailer and outsourcing remanufacturer as followers. The research shows that the outsourcing remanufacturers will increase profits by active recycling and remanufacturing when they can earn profits.Secondly, taking risk attitude as a consideration factor of supply chain members’ decision-making to build the remanufacturing outsourcing supply chain model based on risk aversion. This paper analysed the effect of risk aversion on the supply chain members’ decision-making behaviour and income by researching on remanufacturing outsourcing supply chain model based on risk aversion from the simple supply chain which consists of risk aversion retailers and suppliers.Finally, this paper further analysed the degree of the effect of risk aversion on the supply chain members’ decision-making behaviour by numerical experiment. This study has great guiding significance and practical value to the operating practice of remanufacturing outsourcing supply chain based on risk aversion.