The economic and environmental effect of remanufacturing authorization in the fuzzy environment

¹ School of Mathematics and Statistics, Wuhan University of Technology, Wuhan 430070, P.R. China
² Southampton Business School, University of Southampton, Southampton SO17 1BJ, UK
³ Centre for Operational Research, Management Sciences, and Information Systems (CORMSIS), University of Southampton, Southampton SO17 1BJ, UK

^* Corresponding author: bowenfang.math@whut.edu.cn

Received: 5 October 2024
Accepted: 5 June 2024

Abstract

Remanufacturing has attracted considerable attention because it significantly contributes to a sustainable supply chain where used parts/products can be recycled to reduce waste. Faced with the rise of the remanufacturing business, many original equipment manufacturers (OEMs) choose to authorize independent remanufacturers (IRs) for profit. In this paper, we consider a sustainable supply chain consisting of an OEM and an IR in a fuzzy environment where production cost and market demand are uncertain to study whether such an authorization decision would benefit both the economy and the environment. An unauthorized model (Nash game model) and two authorized models (Cooperative game and Stackelberg game models) are developed. Our results show that the cooperation between the OEM and the IR increases the selling price of the product, and therefore encourages authorization financially. However, a leader position of the OEM (i.e., in the Stackelberg game) helps achieve a win–win situation where profit maximization also improves the environment. Furthermore, our analysis illustrates that considering a fuzzy environment will boost the chances of authorization and help achieve a win–win situation.