Design Of Product Warranty In The Closed-Loop Supply Chain

As product life cycles being increasingly shorter and product replaced more frequently, the used products are rapidly increasing, which has polluted the environment that human beings live. Remanufacturing has not only important environmental benefits by reducing waste and minimizing the need for raw materials. It also improves economical performance of the products due to lower production costs. Recently, due to the rapid technological development and fierce competition in the marketplace, the manufacturers are under pressure to extend the coverage period of their after sale services by offering long-term warranty. Manufacturer uses base warranty to protect consumers against product failure and to signal product quality.We study the design of reverse channels in a supply chain consisting of a manufacturer and a retailer under the condition that manufacturer provides free repair warranty(FRW). The manufacturer makes a new product and sells it through the retailer in a previous period. Used products are collected for remanufacturing at the end of the previous period. The used products can be collected by the manufacturer or by the retailer or by the third party. We use game theoretic models to explore how the optimal reverse channel choice is influenced by the pricing strategies on new and remanufactured products, and by the base warranty.The main contents of this paper are as followed:Firstly, we introduce the research background and significance of this paper, then describe the research ideas and structures, finally point out some contributions.Secondly, based on the summary of relative references, we elaborate the domestic and foreign researchs on the design of reverse channels, the pricing policies, product base warranty and extended warranty. Then we point out some shortcomings in these researchs.Thirdly, when considering the new products and the remanufactured products priced consistently, we model decentralized decision-making systems with the manufacturer being the Stackelberg leader based on product base warranty, then explore how the parameters influence the supply chain.At last, when considering the new products and the remanufactured products priced differently, we model decentralized decision-making systems with the manufacturer being the Stackelberg leader based on product base warranty, then analysis how the parameters influence the supply chain.We find the length of new products and remanufactured products are equal in centrally coordinated system and decentralized decision-making systems. When Differential pricing, we find that the most effective way to collect used products is through the manufacturer in the situation that manufacturer provides the base warranty. In addition, with the willingness to pay increasing, both the manufacturer and the supply chain can get more profits.