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Optimal recycling price strategy of clothing enterprises based on closed-loop supply chain

  • *Corresponding author: Xiaofen Ji

    *Corresponding author: Xiaofen Ji

The research is supported by Zhejiang Soft Science Foundation Project Grant No.2020C35038

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  • More and more garment enterprises begin to pay attention to the importance of recycling, take the corresponding recycling strategy to recycle garment products and remanufacture, forming a closed-loop supply chain (CLSC). In reality, recycling is a complex system, the recycling strategy of clothing brands will not only affect the reverse channel of closed-loop supply chain, but also affect the consumer demand of forward channel, and then affect the profit of supply chain. In order to solve this problem, we propose a CLSC composed of a manufacturer, a retailer and a collector, establish three different Stackelberg leadership models, and derive the optimal recycling strategy. Our results show that consumers' sensitivity to the recycling price will affect the optimal decision of supply chain members. The increase of the recycling market is not always beneficial to the profits of supply chain members. By comparing the profits of the three models, it is found that the retailer leadership model is the most effective scenario of CLCS. The results of this paper provide a reference for garment enterprises to formulate recycling strategies.

    Mathematics Subject Classification: Primary: 90B50, 91A10; Secondary: 90C05.

    Citation:

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  • Figure 1.  Different power structures of CLSC

    Figure 2.  The influence of market size on optimal decision

    Figure 3.  The influence of the demand sensitivity to retail price on optimal decision

    Figure 4.  The influence of the demand sensitivity to recycling price on optimal decision

    Figure 5.  The influence of basic recycling quantity on optimal decision

    Figure 6.  The influence of recycling quantity sensitivity to recycling price on optimal decision

    Table 1.  Symbols and definitions

    Model parameters
    $ \varphi $ Basic demand, and $ \varphi> 0 $
    $ \beta $ The sensitivity coefficient of demand to the retail price, and $ \beta>0 $
    $ \varepsilon $ The sensitivity coefficient of demand to the recycling price, and $ \varepsilon> 0 $
    $ a $ Basic recycling quantity, and $ a> 0 $
    $ l $ The sensitivity coefficient of recycling quantity to the recycling price, and $ l> 0 $
    $ c_m $ The cost of a new product produced by the manufacturer
    $ c_r $ The cost of remanufacturing a new product using recycled products
    $ \Delta $ $ \Delta = c_m - c_r $, represents the cost saved per unit product during remanufacturing
    $ \Pi $ Profit function symbol, and $\Pi_C^M$ represents the retailer's profit under the manufacturer's leadership mode
    $ w $ The wholesale price given by the manufacturer to the retailer
    $ p $ The retailer's retail price
    $ b $ The recycling price provided by the collector to the consumer
    $ A $ The transfer price of a single product provided by the manufacturer to the collector
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