Title: Optimal operation and supply chain coordination in a closed-loop supply chain with loss-averse attitude

Authors: Etsuko Kusukawa; Yuri Paku

Addresses: Course of Electrical and Electronic Systems, College of Engineering, Osaka Prefecture University, Sakai, Osaka, 599-8531, Japan ' Course of Electrical and Electronic Systems, College of Engineering, Osaka Prefecture University, Sakai, Osaka, 599-8531, Japan

Abstract: From social concerns about 3R activity worldwide, it is urgently needed to construct a closed-loop supply chain (CLSC). It is necessary to consider the negative range of profit due to the uncertain product demand for the optimal operation in the CLSC. This paper proposes the optimal operation for a CLSC with loss-averse attitude of the decision maker's profit. A retailer collects used products from customers by paying an incentive, a manufacturer produces recycled parts with acceptable quality and compensates a part of the collection cost to the retailer. This paper discusses some loss-averse attitudes (LAAs) of the decision maker's profit. Using loss-averse analysis, the optimal operations regarding the product order quantity, the unit collection incentive, and the lower limit of quality level under decentralised CLSC (DCLSC) and integrated CLSC (ICLSC) are determined. The analysis numerically investigates the effects of LAAs on the optimal operations and benefits of profit sharing approaches under ICLSC.

Keywords: supply chain management; closed-loop supply chain; uncertain demand; loss aversion; prospect theory; profit sharing.

DOI: 10.1504/AJMSA.2018.095521

Asian Journal of Management Science and Applications, 2018 Vol.3 No.3, pp.252 - 278

Received: 19 Apr 2018
Accepted: 15 Jul 2018

Published online: 04 Oct 2018 *

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