Decision analysis of closed-loop supply chain under competition environment and heterogeneous consumers

We study competition between a manufacturer and a third-party firm. Different from the existing literature, we focus our attention on the duopoly environment where a third-party firm may intercept end-of-life (EOL) products made by the manufacturer to sell refurbished products. We characterize the heterogeneous demands with new and re-products (remanufactured and refurbished products) and investigate the impact of various parameters in the Nash equilibrium. The results show that there is a “bank run” effect between new products and re-products. When the third-party firm engages in refurbishing, it may steal from the manufacturer’s market share and decrease the manufacturer’s profit. However, no matter the threat of competition existed or not, remanufacturing is always a profitable strategy for the manufacturer. © 2016, UK Simulation Society. All rights reserved.