Pricing Decisions in Decentralized Reverse Supply Chain based on Game Theory Approach

Recently, closed-loop supply chain and reverse logistics activities are being getting more and more attentions and applications. After good experiences inoutsourcing forward logistics activities by manufacturers, the third-party reverse logistics (3PRL) has begun to consider as well. In this area, beneficial coordinationbetween the 3PRL and the manufacturer is a focal point in interactions between them. In this paper, we apply game theory approach on analyzing the optimal price and profit of the manufacturer and the 3PRL. We consider a closed-loop structure contains one manufacturer, customers buyingproductions of manufacturer and one third-party collecting the used products from the customers. Also, in our study two-variable demand functions have been considered for new and used products demands. Evaluation of captured benefit by the members in case of cooperation shows that theprofits of member enterprises are higher than traditional non-cooperation case. On the other hand, the sale price and the collection price are more economical for customers through cooperation of manufacturer and third party

Keywords:

reverse logistics , game theory , third party , pricing , closed-loop supply chain