Optimal operation for green supply chains considering collection incentive and quality for recycling of used products

Takeshi Watanabe, Etsuko Kusukawa, Ikuo Arizono

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In recent years, for the purpose of solving the problem regarding environment protection and resource saving, certain measures and policies have been promoted to establish green supply chains (GSCs); that is, supply chains with material flows from colleciton of used products to reuse of recycled parts in production of products. In this study, we propose an optimal production policy for GSCs while considering the collection incentive of the used products and quality for recycling of used products. Concretely, in GSCs, a retailer pays an incentive for collection of used products from customers and hands over the used products to a manufacturer. In addition, the retailer specifies a production quantity of the product while considering product demand uncertaintity. The manufacturer disassembles the used products, inspects them and classifies recyclable parts into quality levels. After the classification, the manufacturer makes a decision for advisability of reuse based on the quality level of recyclable parts and covers part of the retailer's incentive for collection of used products based on the quantity of recycled parts. In this paper, two types of decision-making approaches for product quantity, collection incentive of used products and lower limit of quality level for recycling in GSCs are used. One is the decision-making under the independent policy in decentralized supply chains where retailers and manufacturers make decisions so as to maximize their profits individually. The other is the decision-making under the cooperative policy in centralized supply chains where retailers and manufacturers make decisions cooperatively so as to maximize the whole system's profit. Additionally, we also discuss supply chain coordination as a manufacturer-retailer partnership based on profit sharing. Furt lier more, we show the effect of the quality of the recyclable parts on the optimal decisions and the expected profits. It is found that the collection incentive of the used products brings more profitability to GSC activity.

Original languageEnglish
Pages (from-to)225-235
Number of pages11
JournalJournal of Japan Industrial Management Association
Volume63
Issue number4
Publication statusPublished - 2013

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Keywords

  • Collection incentive
  • Cooperative policy
  • Green supply chain
  • Independent policy
  • Quality

ASJC Scopus subject areas

  • Industrial and Manufacturing Engineering
  • Applied Mathematics
  • Management Science and Operations Research
  • Strategy and Management

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