Uncertain cost information sharing strategy in a closed-loop supply chain

Remanufacturing is a meaningful way to realise the circular economy, and many manufacturers practice it. Usually, the manufacturer keeps private information about remanufacturing costs because remanufacturing is a relatively new business with an uncertain and complicated remanufacturing process. As a result, the asymmetric information will hinder the development of remanufacturing. To address this problem, we study cost information sharing issues in a supply chain with remanufacturing in this paper. We consider a manufacturer sourcing critical components from a supplier to manufacturing new products and collecting end-of-use products for remanufacturing. In our model, the volume of new products constrains the output of remanufacturing (i.e., quantity constraint). When the quantity constraint works, sharing information lowers the wholesale price. It is advantageous to the manufacturer within a moderate new product cost. Furthermore, we show that sharing information can benefit both social welfare and the environment.

Automated summary

Remanufacturing is a meaningful approach for achieving circular economy, but the lack of cost information sharing hampers its development. This study examines the issues of cost information sharing in a supply chain with remanufacturing, and finds that sharing information on new product volume can lower wholesale price and benefit both social welfare and the environment.