Game Research Of The Closed Loop Supply Chain Based On Advertising And Design Investment

In recent years,environmental protection has become more important as a global issue and people have payed more efforts in reducing the waste of resources.We realize that made new products from used items would be environmental-friendly and economical.In fact,many electronic firms have already started to invest in remanufacturing.The research of remanufacturing is meaningful and insightful for supply chain members.There are two manufacturers and two advertising agents in the thesis.The first manufacturer is a traditional manufacturer that produces new product,namely OEM,while the produces remanufactured products from used cores.Both manufacturers outsource advertising services to agents.The agents independently determine the advertising levels and take the advertising prices from manufacturers.In this study,it is assumed that the OEM invests more efforts in product design and remanufacturer invests extra effort in facilitating the remanufacturing process.First,we establish a noncooperative Stackelberg model,where the manufacturers are the leaders and the agents are the followers.And we solve the equilibrium strategies backward in this two-stage model.Second,we observe the equilibrium characteristics with respect to the advertising and design decisions for all members in the supply chain.Third,we also investigate the competition between two products and the profits of chain members.Our analysis generates the following insights.First,the equilibrium prices and levels decrease with the increase of ultimate cost of advertising but increase as the advertising elasticity increases.Second,with greater cost-savings,remanufactured products have advantages over new products in advertising price,level and market demand.Third,the equilibrium prices and levels increase as the cost-savings of design increases and investment of design contributes to products’ demand and profits.Fourth,when cost-savings of design is greater,new products are superior to remanufactured products in demand and advertising decisions.OEM has great power in investing design to control chain members’ profits.