Article Contents
Article Contents

# Pricing, carbon emission reduction and recycling decisions in a closed-loop supply chain under uncertain environment

• * Corresponding author: Yaodong Ni
• This paper studies the pricing and recycling decision problems in a closed-loop supply chain (CLSC) containing a manufacturer, a downstream retailer, and a third-party recycling left. The manufacturer is subjected to the cap-and-trade regulation and determines the wholesale price of products and carbon emission reduction rate. The retailer determines its resale price to meet customer demands. The third-party recycling left determines the collection rate of recycling and remanufacturing used products. The new product demands, total carbon emissions, and recovery of these products are characterized as uncertain variables due to lack of historical data or insufficient data collected for research. By constructing three decentralized game models, we explore the equilibrium solutions under the corresponding decision-making situation and the corresponding analytical solutions. Finally, numerical experiments are performed to show the total profit of supply chain members for each structure and some special insights are drawn.

Mathematics Subject Classification: Primary: 90B50; Secondary: 91A10, 91A40.

 Citation:

• Figure 1.  The CLSC structure

Table 1.  Notations

 $\bullet$ Decision variables $\omega$: Unit wholesale price to retailer, the manufacturer's decision variable. $r$: Unit markup price of retailer, the retailer's decision variable. $p$: Unit retail price of retailer, where $p=\omega+r$. $\tau$: Recovery rate through third-party channel, $\tau\in[0,1]$, the third-party's decision variable. $\theta$: Carbon emission reduction rate of manufacturer, $\theta\in[0,1]$, the manufacturer's decision variable. $\bullet$ Parameters $c_{n}$: Unit cost of manufacturing the product from raw materials. $c_{r}$: Unit manufacturing cost of the product from return products. $\widetilde{s_{r}}$: Unit sales cost of retailer, an uncertain variable. $\widetilde{d}$: The market base of product, an uncertain variable. $\widetilde{C}$: Total emissions of the manufacturer, an uncertain variable. $p_{c}$: Average recycling price for used product from the third-party to the manufacturer. $A$: Average recycling price for used products through the third-party channel. $e$: Initial carbon emission of unit product. $\Omega$: Total carbon free permits from government. $\rho$: Cost coefficient of emissions reduction investment. $\lambda$: Coefficient of carbon emissions reduction unit recovery rate. $b$: Carbon buying price of unit product. $s$: Carbon selling price of unit product.

Table 2.  Parameters for the model

 Parameters $c_{n}$ $c_{r}$ $p_{c}$ $A$ $b$ $s$ $e$ $k$ $\lambda$ $\rho$ $\Omega$ Value 20 10 7 5 13 6 2.5 1200 1500 10000 5000

Table 3.  Distributions of uncertain variables

 Parameters Distribution Expected value $\tilde{\beta}$ $\mathcal{L}$(0.4, 0.8) 0.6 $\tilde{\gamma}$ $\mathcal{L}$(0.2, 0.4) 0.3 $\tilde{d}$ $\mathcal{Z}$(700,950, 1000) 900 $\tilde{s_{r}}$ $\mathcal{L}$(3, 5) 4

Table 4.  The optimal decisions of the three structures under buying carbon quotas

 Structure $\omega^{\ast}$ $\theta^{\ast}$ $\pi^{b}_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS 753.7486 0.7351 224163.5012 375.3678 82851.5121 0.1856 41.3482 RS 1161.6480 0.2598 143452.4000 222.6841 15340.8000 0.0579 4.0227 VN 512.1873 0.9743 210343.7000 496.2082 145447.5000 0.2460 72.6462

Table 5.  The optimal decisions of the three structures under selling carbon quotas

 Structure $\omega^{\ast}$ $\theta^{\ast}$ $\pi^{b}_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS 758.6526 0.3429 193461.0000 372.8177 81719.3100 0.1844 40.7821 RS 1156.2150 0.1368 107485.1000 229.5259 15617.3600 0.0572 3.9213 VN 516.9945 0.4553 174966.9000 493.6749 143955.4000 0.2448 71.9002

Table 6.  Effects of the retailer sales costs $\tilde{s}_r$ on the optimal results under buying carbon quotas

 Structure $\tilde{s}_{r}$ $\omega^{\ast}$ $\theta^{\ast}$ $\pi_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS $\mathcal{L}$(2.5, 5.5) 753.7724 0.7351 224152.9000 375.4051 82890.7900 0.1856 41.3454 $\mathcal{L}$(3, 5) 753.7486 0.7351 224163.5012 375.3678 82851.5121 0.1856 41.3482 $\mathcal{L}$(3.5, 4.5) 753.7789 0.7351 224176.7000 375.3218 82777.9400 0.1856 41.3517 RS $\mathcal{L}$(2.5, 5.5) 1161.6360 0.2598 143442.6000 222.7092 15407.3100 0.0579 4.0218 $\mathcal{L}$(3, 5) 1161.6480 0.2598 143452.4000 222.6841 15340.8000 0.0579 4.0227 $\mathcal{L}$(3.5, 4.5) 1161.6620 0.2599 143464.5000 222.6533 15264.5700 0.0579 4.0239 VN $\mathcal{L}$(2.5, 5.5) 512.1714 0.9743 210333.8000 496.2412 145507.4000 0.2460 72.6412 $\mathcal{L}$(3, 5) 512.1873 0.9743 210343.7000 496.2082 145447.5000 0.2460 72.6462 $\mathcal{L}$(3.5, 4.5) 512.2070 0.9743 210355.9000 496.1676 145379.4000 0.2460 72.6524

Table 7.  Effects of the retailer sales costs $\tilde{s}_r$ on the optimal results under selling carbon quotas

 Structure $\tilde{s}_{r}$ $\omega^{\ast}$ $\theta^{\ast}$ $\pi_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS $\mathcal{L}$(2.5, 5.5) 758.6278 0.3429 193450.0000 372.8552 81758.7700 0.1840 40.7793 $\mathcal{L}$(3, 5) 758.6526 0.3429 193461.0000 372.8177 81719.3100 0.1844 40.7821 $\mathcal{L}$(3.5, 4.5) 758.6834 0.3429 193474.6000 372.7715 80964.4000 0.1844 40.7856 RS $\mathcal{L}$(2.5, 5.5) 1158.2020 0.1368 107475.7000 229.5509 15952.6800 0.0572 3.9204 $\mathcal{L}$(3, 5) 1156.2150 0.1368 107485.1000 229.5259 15617.3600 0.0572 3.9213 $\mathcal{L}$(3.5, 4.5) 1156.2300 0.1368 107496.8000 229.4951 15541.0800 0.0572 3.9223 VN $\mathcal{L}$(2.5, 5.5) 516.9780 0.4553 174957.1000 493.7081 143955.3000 0.2448 71.8953 $\mathcal{L}$(3, 5) 516.9945 0.4553 174966.9000 493.6749 143889.4000 0.2448 71.9002 $\mathcal{L}$(3.5, 4.5) 517.0149 0.4553 174979.1000 493.6339 143887.0000 0.2448 71.9062

Table 8.  Effects of the greening level elastic coefficient $\tilde{\gamma}$ on the optimal results under buying carbon quotas

 Structure $\tilde{\gamma}$ $\omega^{\ast}$ $\theta^{\ast}$ $\pi_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS $\mathcal{L}$(0.15, 0.45) 753.7486 0.7351 224163.5000 375.3678 82826.4400 0.1856 41.3482 $\mathcal{L}$(0.2, 0.4) 753.7486 0.7351 224163.5012 375.3678 82851.5121 0.1856 41.3482 $\mathcal{L}$(0.25, 0.35) 753.7486 0.7351 224163.5000 375.3678 82851.4700 0.1856 41.3482 RS $\mathcal{L}$(0.15, 0.45) 1161.6480 0.2598 143452.4000 222.6842 15340.7800 0.0579 4.0227 $\mathcal{L}$(0.2, 0.4) 1161.6480 0.2598 143452.4000 222.6841 15340.8000 0.0579 4.0227 $\mathcal{L}$(0.25, 0.35) 1161.6480 0.2598 143452.4000 222.6841 15340.7900 0.0579 4.0227 VN $\mathcal{L}$(0.15, 0.45) 512.1873 0.9743 210343.7000 496.2082 145447.5000 0.2460 72.6462 $\mathcal{L}$(0.2, 0.4) 512.1873 0.9743 210343.7000 496.2082 145447.5000 0.2460 72.6462 $\mathcal{L}$(0.25, 0.35) 512.1873 0.9743 210343.7000 496.2082 145447.5000 0.2460 72.6462

Table 9.  Effects of the greening level elastic coefficient $\tilde{\gamma}$ on the optimal results under selling carbon quotas

 Structure $\tilde{\gamma}$ $\omega^{\ast}$ $\theta^{\ast}$ $\pi_{m}$ $r^{\ast}$ $\pi_{r}$ $\tau^{\ast}$ $\pi_{t}$ MS $\mathcal{L}$(0.15, 0.45) 758.6554 0.3429 193462.2000 372.8136 81714.9800 0.1844 40.7825 $\mathcal{L}$(0.2, 0.4) 758.6554 0.3429 193461.0000 372.8177 81719.3100 0.1844 40.7825 $\mathcal{L}$(0.25, 0.35) 758.6554 0.3429 193462.2000 372.8136 81714.9600 0.1844 40.7825 RS $\mathcal{L}$(0.15, 0.45) 1156.2160 0.1368 107486.2000 229.5232 15612.7900 0.0572 3.9214 $\mathcal{L}$(0.2, 0.4) 1156.2160 0.1368 107485.1000 229.5259 15617.3600 0.0572 3.9214 $\mathcal{L}$(0.25, 0.35) 1156.2160 0.1368 107486.1000 229.5232 15612.7800 0.0572 3.9214 VN $\mathcal{L}$(0.15, 0.45) 516.9964 0.4553 174968.0000 493.6712 143951.5000 0.2448 71.9007 $\mathcal{L}$(0.2, 0.4) 516.9964 0.4553 174966.9000 493.6749 143955.4000 0.2448 71.9007 $\mathcal{L}$(0.25, 0.35) 516.9964 0.4553 174968.0000 493.6712 143951.5000 0.2448 71.9007
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