Group for Research in Decision Analysis

G-2020-76

Cost-revenue sharing in a dynamic closed-loop supply chain with uncertain parameters

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We represent a closed-loop supply chain formed of one manufacturer and one retailer as a dynamic game played over an event tree, which naturally allows to capture the dynamic nature of product returns for remanufacturing and uncertainties in the parameter values. We characterize and compare the equilibrium results in two different scenarios. In the benchmark scenario, we assume that there is no collaboration between the two players and the manufacturer pays the cost of green activities, which aim at increasing the product return. In the second scenario, namely reverse revenue cost sharing (RRCS) contract, the retailer contributes in the cost of the green activities incurred by the manufacturer and the latter transfers a part of its revenues to the former in return. Numerical experiments are provided.

, 28 pages