The closed-loop supply chain network with competition, distribution channel investment, and uncertainties

In this paper, a closed-loop supply chain network is investigated with decentralized decision-makers consisting of raw material suppliers, retail outlets, and the manufacturers that collect the recycled product directly from the demand market. We derive the optimality conditions of the various decision-makers, and establish that the governing equilibrium conditions can be formulated as a finite-dimensional variational inequality problem. We establish convergence of the proposed algorithm that can allow for the discussion of the effects of competition, distribution channel investment, yield and conversion rates, combined with uncertainties in demand, on equilibrium quantity transactions and prices. Numerical examples are provided for illustration.

► Multiple decision-makers within CLSC are to reach the equilibrium prices and transactions.
► The manufacturers can invest in the reverse supply channel to increase the recycled product volume.
► Uncertainties in demand and yield rate are captured.
► Numerical examples are used to provide additional managerial insights.