A novel perspective on closed-loop supply chain coordination: Product life-cycle approach

Due to the dynamic nature of product life-cycle (PLC) and exclusive features of different phases, operational and long-term decisions such as supply chain coordination (SCC) may encounter some challenges. However, no studies have been done so far to evaluate the life-cycle impacts on SCC. In this regard, this paper studies a coordination approach in a closed-loop supply chain (CLSC) during the PLC including introduction, growth, maturity, and decline phases. The market demand and return rate functions are characterized according to the different phases as well as time-varying pricing decisions. First, the proposed problem is examined under the decentralized and centralized structures with life-cycle considerations. Then, a hybrid contract inspired by two-part tariff and joint collection cost mechanisms is developed to coordinate the channel. Finally, some numerical experiments and in-depth sensitivity analyses with a focus on different PLC phases are carried out. The results indicate that although the hybrid contract is able to satisfy a Pareto optimal solution in the life-cycle model, it does not necessarily work optimally in individual phases. On the other hand, contrary to the introduction phase, as the length of growth, maturity, and decline phases increase, the profits of channel players increase which implies that in order to design a more profitable PLC structure, a fundamental planning is needed. (c) 2020 Elsevier Ltd. All rights reserved.

Automated summary

This paper studies a coordination approach in a closed-loop supply chain during the product life cycle, and finds that while the hybrid contract can achieve a Pareto optimal solution in the life-cycle model, it may not work optimally in individual phases.