Demand disruptions, pricing and production decisions in a closed-loop supply chain with technology licensing

This paper investigates disruptions of market demand and supply quantity of used products in a closed-loop supply chain where the manufacturer licenses the third party to undertake remanufacturing activities. It is found that, when both market demand and supply quantity of used products face large-scale positive disruptions, the manufacturer's licensing behavior will be enhanced because he can extract more remanufacturing profits by charging a higher licensing fee. While if the negative disruptions of market demand and supply quantity of used products are large enough, the manufacturer's incentive to license the third party to conduct remanufacturing will be weakened due to a smaller remanufacturing profit shared from the third party. The manufacturer would adjust the wholesale price and the licensing fee to realize the maximum profit and coordinate the forward and reverse flows. Additionally, there exists a robust region for the production decisions and the licensing fee when the channel faces disruptions.