Optimal price and service decisions for sharing platform and coordination between manufacturer and platform with recycling

In this paper, a supply chain with a manufacturer and an Internet sharing platform who leases products to customers is considered. We solve the optimization problem in two structures, namely, without and with recycling. In basic structure, manufacturer produces new products and sells them to the platform. Then platform leases products to customers with per-use price and service level. Since platform keeps the ownership of products, reverse logistics from platform to manufacturer is explored. In both cases, cooperative and non-cooperative relationships between manufacturer and platform are discussed. The results show cooperation is better than noncooperation in profit and service aspects. Total profit in non-cooperative case accounts for 3/4 of the total profit in cooperative case, among which manufacturer's profit is 1/2 and platform's profit is 1/4. We also investigate the coordination policy between manufacturer and platform in noncooperative case via the recycling subsidy and find that subsidy affects the wholesale price merely. An example is given to illustrate values and sensitivity analyses are performed theoretically and numerically.