Decision and coordination analysis of extended warranty service in a remanufacturing closed-loop supply chain with dual price sensitivity under different channel power structures

School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing 210044, P.R. China

^* Corresponding author: zxd@nuist.edu.cn

Received: 9 April 2021
Accepted: 20 March 2022

Abstract

This paper studies the impact of dual price sensitivity (product price sensitivity and extended warranty service price sensitivity) on the decision of the closed-loop supply chain (CLSC) where manufacturers are responsible for recycling and providing extended warranty service under different channel power structures. First, the dynamic game model is used to describe the three channel power structure models of centralized (C), Manufacturer-led Stackelberg (MS), and Retailer-led Stackelberg (RS). Then, mathematical optimization and reverse induction are used to derive supply chain decision-making and performance levels. On this basis, we further designed a contract to coordinate the supply chain, and use numerical examples to analyze and verify the impact of remanufacturing cost savings and dual price sensitivity on the supply chain system. Research shows that channel power structures, remanufacturing cost savings and dual price sensitivity all have an important impact on the supply chain and corporate profits.