Product Upgrading,Production and Coordination of Closed-loop Supply Chain Considering Retailer Fairness Concern
With the continuous advancement of science and technology,product upgrading and replace-ment come at increasingly short intervals,resulting in the shortening of product life cycle.At the same time,as people become more and more aware of environmental protection and waste recycling,the closed-loop sup-ply chain has attracted the attention of enterprises and governments around the world.In this paper,we studied the production and profit coordination of a closed-loop supply chain that takes product upgrading,consumer upgrade preferences,and fairness concerns into consideration.In this closed-loop supply chain,the manufac-turer and the retailer would negotiate to adjust their revenue ratio through a profit-sharing mechanism so as to maximize the overall profit of the supply chain,and on this premise,achieve Pareto optimization for the manu-facturer and the retailer.Then after introducing in the fairness concern coefficient,we discussed the optimal production strategy of the closed-loop supply chain under the centralized and decentralized decision-making mode respectively,and analyzed the impact of retailer fairness concern and the difference of product perfor-mance before and after upgrade on the profit of the supply chain.Using the Stackelberg game method,we con-structed three models,namely the centralized decision-making model,the decentralized decision-making model without fairness concern,and the decentralized decision-making model with fairness concern,and through parameter comparison,explored the optimal product upgrade strategy for the supply chain.Then in a numerical simulation,we compared the calculation results of the above models and found that(1)The retail-er's fair concern behavior would cause the manufacturer to lower the wholesale price,which to a certain extent constitutes a"profit-surrendering"behavior.(2)Product upgrade can increase the profit of both the manufac-turer and the retailer,and as the leap in performance before and after the upgrade widens,the profit of both par-ties will rise sharply.(3)There is competition between the products with and without upgrade,and the manu-facturer need to reasonably control the performance gap before and after the upgrade so that both the products before and after the upgrade can have better market demand,while given constant performance gap before and after upgrade,continuous product innovation would increase the overall benefits of the supply chain.(4)The fairness concern of the retailer would not affect the retail price and demand of the product,but could,to a cer-tain extent,propel the manufacturer to lower the wholesale price.Finally,we designed a pricing contract coor-dination model for the closed-loop supply chain and by adjusting the relevant parameters,found that under the pricing contract coordination model,the benefits of each member were higher than those under decentral-ized decision-making and the coordinated supply chain achieved Pareto optimization and realized overall prof-it equal to that under centralized decision-making,which indicates that the pricing contract could well coordi-nate the closed-loop supply chain.