Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing

The development of information technologies and e-commerce has allowed many companies to set up online platforms to sell their products in dual-channel supply chain (SC) networks. The double competition between new and remanufactured products within channels and across competing channels affects manufacturer and retailer pricing decisions. However, the current state of the literature shows a gap in the modelling and analysis of a dual-channel SC with both cross-channel competition and channel costs. To fill this gap, this paper develops a model for a CLSC in which the manufacturer sells new products through a retail channel and also directly through its online channel. The manufacturer may also sell remanufactured products in its online direct channel if it decides to produce them. The results indicate that: (i) the manufacturer’s production and optimal pricing strategies depend on both production and channel selling costs; (ii) remanufacturing is not considered by the manufacturer when the unit manufacturing cost is sufficiently low and the retailer’s channel cost is sufficiently high; (iii) the introduction of remanufacturing hurts the retailer’s profit only when the unit manufacturing cost is sufficiently high; and (iv) selling the new product online mitigates the effect of remanufacturing on the retailer, and thus a high customer’s acceptance of the remanufactured product can benefit the retailer.