Research on remanufacturing closed loop supply chain based on incentive-compatibility theory under uncertainty

Based on incentive-compatibility theory, a total cost model of a remanufacturing closed-loop supply chain system considering carbon taxes and subsidies under uncertain market demand and recycled products quality is constructed. In order to clarify the uncertainty factors about this model, fuzzy opportunity constraint programming method is proposed. As a discrete optimization problem, meta-heuristics methods, Genetic Algorithm (GA) and Particle Swarm Optimization (PSO) are used to find and compare a calculating example's approximate optimal solution about this model. The calculating results indicate that the system cost changes under different combinations of market demand and recycled products quality. The carbon tax policy (compatibility) set by government may reduce the carbon emissions of enterprises, but the increase of the enterprises' cost will significantly negatively affect their willingness to reduce carbon emissions. Therefore, incentives such as subsidies are needed. There exists an optimal incentive-compatibility combination, under which closed-loop supply chain system can achieve optimal cost reduction and carbon emissions reduction effect. This study helps enterprises make reasonable production plan to reach their optimal objective in uncertain environment, and also helps government make full use of incentive-compatibility theory to guide enterprises to reduce carbon emission and improve recovery rate and remanufacturing rate.