Coordination of a Bi-Level Closed-Loop Supply Chain considering Economic and Green Transportation Modes

Abstract

In recent years, comprehensive researches have provided ample support for the supply chains in the coordinated decision-making framework. However, the issue of closed-loop supply chain coordination considering various transportation modes has not yet been addressed in the literature. In this paper, a two-echelon closed-loop supply chain consisting of a manufacturer and a retailer is investigated in which the manufacturer acts as a Stackelberg leader and the retailer plays follower role. All transportation activities between the channel members are carried out via two transportation types including the economic and green modes. First, the proposed problem is examined under the decentralized and centralized settings. Then, a mathematical modeling is developed to coordinate the decisions related to retail price, collection effort, and ratio of transportation mode selection. Finally, some numerical examples are applied with the aim of analyzing the performance of decentralized, centralized, and coordinated decision-making structures. The results reveal that not only the Pareto optimal solution is achievable for both channel members but also the coordination scheme has sufficient efficiency to reach the best solution up to the centralized setting.

Keywords

• supply chain coordination
• closed-loop
• game theory
• transportation mode
• collection effort.