Research on services decision-making in closed-loop supply chain dominated by a logistics provider

Remanufacturing is an advanced form of recycling in circular economy. In order to promote the development of remanufacturing, the government gradually uses subsidy policies to regulate and intervene related enterprises. In this paper, we assume that a closed-loop supply chain consists of an original equipment manufacturer (OEM) producing new products from raw materials, a remanufacturer producing re-manufactured products from used items directly collected from customers, and a logistics provider which sells and distributes two products as a monopolist in the given market. By constructing game model in which logistics provider is a leader and OEM and remanufacturer are the equal status followers, we solve chain members’ optimal services decision-making under government subsidy. Finally, considering the government subsidy, we analyze the impact of remanufacturer service level and the logistics provider service scope on members’ equilibrium decision-making. Analysis shows that government subsidy policies are always profitable for enterprises. The OEM and the logistics provider have the same choice. They would choose the subsidy policy for the service scope of the logistics supplier in order to improve the service level of new products and the service scope of the logistics supplier. The remanufacturer would believe that subsidizing the service level of remanufactured products is more effective in improving his own profits.