Research On Coordination And Incentive Mechanism Of The Closed-Loop Supply Chain With Scrap Recycling And Reproduction

In recent years, Chinese iron and steel industry develops rapidly. As an industry of high resource consumption, the top priority of iron and steel enterprises is to realize cycle economy by reducing the cost, protecting the environment, improving the utilization rate of resource and advancing market competition capability. In addition, compared with the international average level and that of developed countries, scrap reproduction ratio of China is much lower. The government should encourage steel enterprises to reproduce iron and steel with scrap in order to save resource and energy, improve environmental protection and accelerate the process of sustainable social development. Therefore, the study of closed-loop supply chain model of scrap recycling and reproduction and the pertinent incentive mechanism is very important both in theory and in practice. It could improve the situation of iron and steel industry and deepen sustainable development strategy.In this paper, we studied decision-making among the government, the steel producer, the retailer and the third party recycler, the choice of scrap recycling channel and principal-agent incentive mechanism between the producer and the retailer. The main contents are as follows:Decision-making problem of closed-loop supply chain with scrap recycling and reproduction under macroeconomic constraint of the government. Considering internal scrap recycling of the producer and the effort of the recycling party, we designed an incentive function between the government and the producer, and established three closed-loop supply chain models of three recovery modes based on producer recovery, retailer recovery and third party recovery respectively. We compared the scrap recovery rates and profits of participants under optimal policy of three recovery models to select optimal scrap recycling channel,and analyzed the effect of government reward and punishment mechanism on incomes of the producer, scrap recovery rate and price; The incentive contracts design problem of closed-loop supply chain with scrap recycling and reproduction.Considering that the producer uses iron ore and scrap to produce iron and steel, we established a linear incentive contract based on multi task principal-agent between the producer and the retailer, then analyzed and compared the parameter change on the impact of incentive coefficients of the producer, profit of the producer and agency cost under information symmetry and information asymmetry.In this paper, three methods are mainly used for researching decision-making of closed-loop supply chain, the choice of scrap recycling channel and the incentive mechanism:the Stackelberg theory, the principal-agent theory and linear programming. The results are as follows:when the retailer is responsible for scrap recycling, scrap recovery rate and profit of the producer are maximum; Profit of the producer and scrap recovery rate increase when the overall cost saving per unit of scrap reproduction or the government incentive unit factor increases, while profit of the producer and scrap recovery rate decrease when scrap minimum recovery rate by the government increases;In multi task principal-agent with a moral hazard, profit of the producer and incentive coefficients decrease when the effort cost coefficient,the uncertainties of the markets or risk aversion factor increases, while agency cost increases when the effort cost coefficient,the uncertainty of the market or risk aversion factor increases; In general, the producer should increase sales incentive factor and reduce recycling incentive factor when risk aversion factor of the retailer increases; The producer should give a bigger incentive factor of the task with smaller effort cost coefficient and market uncertainty than that of the task with greater effort cost coefficient and market uncertainty. Based on the actual, the conclusions above provide the reference suggestions to the implementation and the improvement of closed-loop supply chain with scrap recycling and reproduction in our country.