Research on Optimization Decision-making of Closed-loop Supply Chain under Loss Aversion

This paper consider optimization decision-making of closed-loop supply chain based on revenue sharing contract and prospect theory, and study the effect of lose aversion on the performance of closed-loop supply chain. We establish a decision-making model for the closed-loop supply chain which consists a loss averse retailer and a loss averse manufacturer. Through the analysis of this model under both centralized and decentralized closed-loop supply chain, we show how the characteristic of loss aversion affect optimal order quantity and optimal wholesale price respectively, and display the relationship between recycling price and loss aversion coefficient. In the last part of the model analysis, we give the conditions which can realize perfect coordination of the closed-loop supply chain. Finally, we give a numerical example to verify all the conclusions we obtain.