A Game-Theoretic Approach for Pricing in a Two Competitive Closed-Loop Supply Chains Considering a Dual-Sourcing Strategy in The Presence of a Disruption Risk

Nowadays, disruption in supply is inevitable because of political, geographical, and environmental circumstances, which can have devastating effects on supply chains, including market loss and lower economic benefits. In terms of investigating pricing decisions in a closed-loop supply chains (CLSCs) by considering supply disruption, in this study, two CLSCs are considered. One of them benefits from one retailer and two internal and external suppliers to deal with supply disruption in contrast to another that only benefits from one integral supplier and a retailer. The decision variables are obtained in two interdependent levels of competition using a game-theoretic approach. In the first level, two Stackelberg games, as well as one simultaneous moving game, are conducted in the competition between retailers, whereas, in the second level, one Stackelberg game is used for each supply chain in a competition between retailers and suppliers. As one of the main contributions of this study to the literature, the previous studies on product pricing using a game-theoretic approach are extended by conducting a comprehensive approach considering disruption risk and sourcing strategies in an environmentally friendly CLSC. For better illustration, numerical and sensitivity analyses are presented. It is indicated that in the first supply chain, the retailer has higher flexibility against the supply disruption using a dual-sourcing strategy which helps it maintain the market and customers. However, in higher risks, the retailer loses some profit, and the competitor gains more. Furthermore, the data indicate that in the absence of an alternative supplier, collecting and recycling can play an important role in reducing the profit loss and surviving supply chain.