used products

European Journal of Operational Research

• Two ways of recycling used products in a closed-loop supply chain are proposed. • The collection delegation strategy in a supply chain with different channel structures is investigated. • The impacts of collection delegation on firms are different under different channel structures. • Optimal channel choice for the manufacturer in a supply chain with trade-ins is provided. • The effects of the trade-in-for-new program on the manufacturer and retailer are explored. A continuous supply of used products ensures large-scale remanufacturing. Manufacturers can delegate used product collection to third-party collectors (3PCs) that provide a trade-old-for-cash (TOC) program, in addition to collecting used products through a trade-old-for-new (TON) program. However, few studies have investigated the interactions between collection delegation and channel structure in a supply chain. To fill this gap, we develop game-theoretic models in a supply chain under traditional retail channel and dual-channel structures to explore whether and when the manufacturer adopts the collection delegation policy and examine the optimal channel choice for trade-ins. Our finding shows that the manufacturer always benefits from collection delegation, but the retailer would be worse off from such delegation in certain cases. To be specific, under the retail channel structure, collection delegation has no impact on the retailer when the salvage value of used products is relatively low, whereas it hurts the retailer when the salvage value is relatively high. However, under the dual-channel structure, collection delegation never affects the retailer. Moreover, we find that the manufacturer's channel choice depends on the consumer acceptance of the direct channel and the salvage value of used products. We further consider the case that the manufacturer does not introduce the TON programs to explore the effects of TON and the case that the new and remanufactured products are sold at different retail prices to examine the equilibrium strategies. Our...

Optimal collection delegation strategies in a retail-/dual-channel supply chain with trade-in programs