Coordination with Incomplete Information in a Closed-Loop Supply Chain under Retailer Collection Channel

Recently, the product remanufacturing has been a hot topic in the field of operational management, and more manufacturers are beginning to recover the value in their end-of-life, (EOL) products by remanufacturing. This paper focuses on the closed-loop supply chain where the retailer takes charge of not only retail, but also used-product collection. There are two possible types of the manufacturer as an assumption, i.e. her remanufactured product quality is good or poor, and of course the manufacturer knows her type, whereas the retailer only has a prior probability over the two possible quality types. This paper deploys the contracts with which the good quality manufacturer can signal her type to the retailer improve her profit under incomplete information. As a result, the signalling mechanism can help the good quality manufacturer distinguish her from the poor.