Group for Research in Decision Analysis


A Two-Period Game of a Closed-Loop Supply Chain


We consider a two-period closed-loop supply chain (CLSC) game where a remanufacturer appropriates of the returns' residual value and decides whether to exclusively manage the end-of-use product collection or to outsource it to either a retailer or a third-service provider (3P). We determine that the manufacturer outsources product collection to a retailer only when the incentive is sufficiently high, but outsources to a 3P when it performs better operationally. In contrast, the retailer always prefers to manage product returns exclusively, independently of economic convenience and operational performance. Finally, the choice of the CLSC structure leads to a higher environmental performance depending on the collector's operational efficiency.

, 28 pages