Collection and Coordination Strategies in a Dual-Channel Closed-Loop Supply Chain Under Manufacturer Diseconomies of Scale

• Main Authors: Li-Ping Song, Shan Liu, Feng-Min Yao, Yan Xing
• Format: Article
• Language: English
• Published: IEEE 2021-01-01
• Series: IEEE Access
• Subjects: Diseconomies of scale; dual-channel closed-loop supply chain; pricing decision; collection strategy; coordination
• Online Access: https://ieeexplore.ieee.org/document/9505615/

Manufacturing enterprises often face the problem of an increasing production cost per unit of output—that is, diseconomies of scale—due to technology or management ability. This paper examines the collection channel selection and coordination strategies of a dual-channel closed-loop supply chain (CLSC) in the presence of manufacturer diseconomies of scale. Decision models for a dual-channel CLSC with single- and dual-channel waste product collection are constructed from the perspectives of centralized and decentralized decision-making, and the effects of diseconomies of scale and sales/collection competition on the pricing of new products and the waste product collection rate are analyzed. Moreover, criteria for selecting a collection channel are given for CLSC members and the system as a whole, and two-part tariff contracts are designed to coordinate the dual-channel CLSC under different collection channels. We find that the optimal pricing decision and members’ profits are negatively correlated with diseconomies of scale and positively correlated with sales competition. Under the dual-channel sales structure, the direct sales volume is more than twice that of retail sales, the stronger the sales competition, the more pronounced this advantage is. Further, from the perspective of collection, when collection competition is weak, the dual-channel collection strategy is optimal, while as competition increases, the single-channel collection strategy may be better. The manufacturer’s collection rate is more than twice that of the retailer under dual-channel collection, and the stronger collection competition is, the larger this gap is. Finally, the conclusions are verified by numerical simulation, and management insights are proposed.