Risk Management of Closed-Loop Supply Chain by Third-Party Collecting

Chengdong Shi, Xiuxia Yan, Fuli Guo, Renyu Peng

Abstract


Considering retailer’s risk aversion and third-party’s cournot competition, a closed loop supply chain which contains a risk-neutral supplier, a loss-averse retailer and two third-party logistics is established by using game theory, and the impact of revenue-and-expense sharing contract is analyzed in the channel, which shows that the contract can eliminate the double marginalization and risk aversion effect, and hence the loss-averse closed loop supply chain can achieve coordination. Also, the bound and rule of the contract parameters are given. Finally, by the study of an example and the parameter sensitivity analysis of risk aversion and third party recycler’s competitive, the effectiveness and the practical value of the loss-averse closed-loop supply chain is verified.


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