New products or remanufactured products: Which is consumer-friendly under a closed-loop multi-level supply chain?

If the remanufactured and fresh products are in the market at the same price and quality, then it is difficult for the retailer to sell them all together simultaneously. There is differentiability in the market by the consumers even though they are of similar quality and price. These remanufactured products are the effect of a closed-loop supply chain. The closed-loop type supply chain problems have pulled much attention to tackling environmental and social issues for these remanufactured products. Based on the concern, a closed-loop formation of the supply chain is formulated with four players. Two types of quality are assigned for the manufactured and remanufac-tured products as remanufactured products maintain less quality than the newly manufactured products. The production system is imperfect, then all products are not perfect. A mathematical model with a multi-cycle closed-loop supply chain is discussed here, where the reworking process happens within the same cycle. An acceptance quality level influences the regaining rate of consumed products. The non-integrated phenomenon uses the inventory management policy operated by the vendor and the consignment-type stock policy. This mathematical problem is solved by employing algorithms, developed to achieve the local optimum (non-inte-grated situations) and global optimum (integrated situations). A numerical example and sensitivity analysis are provided to establish the mathematical model numerically. Results obtain that the retailer can tackle the situ-ation in a proper way such that the closed-loop supply chain always is in profit. The profit is globally maximized, and the best results are obtained from different situations.

Automated summary

If remanufactured and fresh products are available in the market at the same price and quality, retailers face difficulties in selling them simultaneously. Despite similar price and quality, consumers differentiate between them. Remanufactured products are a result of closed-loop supply chains, which focus on environmental and social issues. A mathematical model is proposed to tackle the imperfect production system in a multi-cycle closed-loop supply chain, where reworking occurs within the same cycle. The model considers the acceptance quality level and employs algorithms to achieve local and global optima. Results show that retailers can effectively manage the closed-loop supply chain for maximum profit.