EURO 2024 Copenhagen
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2399. Managing Manufacturer Encroachment and Product Conflicts in a Closed-Loop Supply Chain: The Case of Information Asymmetry

Invited abstract in session WB-12: YW4OR_2, stream WISDOM - Women in OR.

Wednesday, 10:30-12:00
Room: 13 (building: 116)

Authors (first author is the speaker)

1. Qin Zhou
Decision Analytics and Risk, University of Southampton

Abstract

Implementation of direct channels allows manufacturers to distribute new and remanufactured products through separate channels. This prompts careful consideration of which products to channel directly. In the production of remanufactured products, manufacturers often delegate the collection of used products to retailers. However, the efficiency of this collection process is typically private information, known only to manufacturers through its probability distribution. To explore the impact of information asymmetry on manufacturers' decisions, we constructed a dual-channel closed-loop supply chain model involving a manufacturer and a retailer where the manufacturer can design non-linear contracts, incentivizing the retailer to choose contracts that align with its capabilities, ultimately maximizing the manufacturer's profit. The study findings indicate that when the retailer exhibits high collection efficiency and remanufacturing costs are low, information asymmetry can distort the production quantities of new and remanufactured products. Manufacturer encroachment consistently proves advantageous, mitigating the negative effects of information asymmetry on product output and consumer surplus. It also raises the entry barrier for manufacturers contemplating remanufacturing. Additionally, a cost threshold for remanufacturing is identified, creating a divergence in how information asymmetry influences manufacturers' profits under various contract types.

Keywords

Status: accepted

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