Environmentally Responsible Closed-Loop Supply Chain Models with Outsourcing and Authorization Options

Journal of Cleaner Production, 278, 123791. https://doi.org/10.1016/j.jclepro.2020.123791

The University of Auckland Business School Research Paper Series

Posted: 1 Nov 2021

See all articles by Zhangwei Feng

Zhangwei Feng

Nanjing University

Tiaojun Xiao

Nanjing University

David Robb

University of Auckland

Date Written: 2021

Abstract

Remanufacturing is a common production mode for firms taking part in sustainable operations and the circular economy because it can improve environmental performance, especially via third-party remanufacturing. This paper studies third-party remanufacturing by developing game models for a closed-loop supply chain with one manufacturer and one third-party remanufacturer. Here the manufacturer has two strategies for third-party remanufacturing: outsourcing and authorization. The third-party remanufacturer collects end-of-life products to produce remanufactured products. Unlike the extant literature, this paper takes environmentally responsible behaviors of consumers and firms into consideration and focuses on how green consumption behavior and environmentally responsible behavior affect the manufacturer’s strategy. It finds that when a large gap exists between green consumer preferences for new and remanufactured products, both the manufacturer and the third-party remanufacturer prefer authorization; otherwise, they prefer outsourcing. In addition, it is difficult for them to select the same strategy for third-party remanufacturing when the environmental cost (the cost of not collecting end-of-life products) is high. However, they can reach an agreement in outsourcing scenario in the case of sequentially identical game. Full paper available at https://doi.org/10.1016/j.jclepro.2020.123791

Keywords: Closed-loop supply chain management, Third-party remanufacturing mode, Green consumption, Environmentally responsible behavior, Game theory

Suggested Citation

Feng, Zhangwei and Xiao, Tiaojun and Robb, David, Environmentally Responsible Closed-Loop Supply Chain Models with Outsourcing and Authorization Options (2021). Journal of Cleaner Production, 278, 123791. https://doi.org/10.1016/j.jclepro.2020.123791, The University of Auckland Business School Research Paper Series, Available at SSRN: https://ssrn.com/abstract=3944332

Zhangwei Feng (Contact Author)

Nanjing University ( email )

Nanjing, 210093
China

Tiaojun Xiao

Nanjing University ( email )

Nanjing, Jiangsu 210093
China

David Robb

University of Auckland ( email )

Dept of Information Systems and Operations Manage
Private Bag 92019
Auckland, 1142
New Zealand
+64-9-923-2812 (Phone)

HOME PAGE: http://www.business.auckland.ac.nz/people/d-robb

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