Inventory decision-making models for a closed-loop supply chain system with different decision-making structures

Abstract

A closed-loop supply chain system with two types of decision-making structures is investigated. The system includes a retailer, a manufacturer, a supplier and a collector, in which the demand of the retailer is fulfilled either by newly manufactured products or by remanufactured products which are as good as the new ones in function and quality. We extend the work of Yuan and Gao [2010. “Inventory Decision-making Models for a Closed-loop Supply Chain System.” International Journal of Production Research 48 (20), 6155–6187.] to the partly centralised decision-making (PCD) structure which consists of A and B type decision-making structures. The system profit-maximisation models are derived and the solution procedures are presented to determine the optimal system policies of A and B type decision-making structures under the (1, R) and (P, 1) polices by the elimination theory. Through the comparative analysis on eight decision-making structures and sensitivity analysis on the return rate, we get the following results: (1) the variation of decision-making structure doesn’t change the choice of the manufacturer policy type on manufacturing and remanufacturing operations for a given return rate; (2) CD structure and CC structure in Yuan and Gao (2010) are two extreme cases of the PCD structure, and the maximum system profits of B type decision-making structure are greater than those of A type decision-making structure; (3) CD system is not the worst decision-making structure to maximise the system profit for specific manufacturer policy type; (4) the maximum system profit of CC system is always greater than those of other decision-making structures; (5) the coordination of different members in the system has various effect on the system profit; (6) B type decision-making structure has more striking effect on the profits of the manufacturer and the retailer than A type decision-making structure, the coordination of the manufacturer and the retailer is the key to maximise the system profit; and (7) for given decision-making structures and manufacturer policy type, the maximum system profit rises with the increase of the return rate.

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