Closed-loop supply chain coordination strategy for the remanufacture of patented products under competitive demand

• Compare of the prices, performances of supply chain systems, etc. under two models.
• Investigate the combined coordinated pricing mechanism of a revenue-and-expense sharing contract and two-part tariffs.
• Provide a reasonable range for the sharing coefficient and agency fees.
• Perfect coordinate the closed-loop supply chain of patented products.
• Study the impact that substitute ratio, coordination parameters, etc. have on supply chain decisions and performance.

In this study, we consider a closed-loop supply chain (CLSC) system comprising an original manufacturer, third-party remanufacturer, and retailer. In this system, the remanufacturer can only recycle and remanufacture the patented products with patent licensing from the original manufacturer, where newly manufactured and remanufactured products are sold together in the same market at different prices, and the demand for the two types of product is sensitive to their retail prices. First, we establish a leader–follower game model and a joint decision-making model, and we compare the performance of the components of the CLSC, i.e., the collection price, selling prices, and profits. Second, we investigate the contract coordination issues among the three parties in the decentralized case, where we develop a coordinated pricing mechanism that incorporates a revenue-and-sharing contract and two-part tariffs, which can perfectly coordinate the CLSC. Thus, a reasonable range can be identified for the sharing coefficient as well as the agency fees for qualifications. Finally, based some numerical examples, we analyze the impact of the salvage value, substitute ratio, coordination parameters, and other factors on the optimal supply chain performance.