The Manufacturer’s Recycling Channel Selection And The Government’s Environmental Policy In Fast Fashion Industry

In recent years,the environmental issues and resource problems caused by the fast fashion industry have become two hot spots in the world.The fast fashion industry has the following characteristics:(1)demand uncertainty(2)product diversity(3)quick response.As an important means to save energy and reduce pollution,Closed-Loop Supply Chain management is favored by many firms.Some fast fashion firms actively carry out Closed-Loop Supply Chain management programs to recycle and reuse unsold inventory and recycled products.In reality,there are two recycling channel options:the self-operated recycling channel and the third-party recycling channel.The operational issue for fast fashion firms is choosing which recycling channel can obtain more profit.In addition,some national and regional governments are ready to introduce policies to address the environmental issues of the fast fashion industry.Governments are faced with the problem of choosing which policy will maximize social welfare.To address these issues,this paper examines the following two aspects:First,we study the recycling channel selection strategy of the manufacturer in the fast fashion industry.Based on Game Theory,the model of Closed-Loop Supply Chain management in the fast fashion industry is constructed by considering the following characteristics:demand uncertainty,product diversity,and quick response capacity.We investigate the optimal decisions of the manufacturer choosing between the selfoperated recycling channel and the third-party recycling channel.We investigate the optimal channel selection strategy of the manufacturer.The results show that,when the fixed cost of the self-operated recycling channel is low,the manufacturer chooses the self-operated recycling channel;when the fixed cost of the self-operated recycling channel is high,the manufacturer chooses the third-party recycling channel.Further,the manufacturer’s recycling channel selection strategies do not affect the manufacturer’s quantity decisions.However,an improvement in reuse capacity leads to an increase in the manufacturer’s expected total quantity produced.Second,government environmental policy strategies in the fast fashion industry are investigated.The effects of the following three environmental policies are considered separately and compared in the fast fashion Closed-Loop Supply Chain model:(1)consumer recycling subsidy policy;(2)manufacturer recycling subsidy policy;(3)tax policy based on the amount of virgin material the manufacturer used.The results show that all three policies promote the manufacturer to recycle more products.All policies make consumer surplus,the environmental impact,and social welfare become higher.However,the tax policy hurt manufacturer profits,while both subsidy policies benefit the manufacturer.In general,this article analyzes the Closed-Loop Supply Chain in-depth based on the characteristics of the fast fashion industry,examining recycling channel selection decision and environmental policy design from the perspective of the manufacturer and the government respectively.The research has enriched more and more Closed-Loop Supply Chain literature and provides some new management insights on reverse channel selection and environmental policies design in the fast fashion industry,among other things.