A decision on advertising in a closed-loop supply chain under price competition

Consumers show reluctance towards the purchase of remanufactured products. For that, previous studies have emphasized the need for advertising in popularizing the remanufactured products among the consumers. In addition, advertising plays an important role in influencing the parameters of the closed-loop supply chain (CLSC) like pricing, collection rate, the profit of each member, and total supply chain profit. Nevertheless, the literature is devoid of studies that analyze the impact of advertising on the performance of CLSC under the competitive scenario. Therefore, the authors aim to address this research gap. This paper proposes a Stackelberg game model that investigates the impact of advertising on the CLSC under the following three competitive scenarios: (1) advertising by the manufacturers, (2) advertising by the retailer, (3) advertising by the manufacturers and the retailer simultaneously. The results reveal that total supply chain profit and collection rate is maximum if advertising is done by both manufacturers and a retailer simultaneously followed by the case of advertising by the manufacturers and is least for the case of advertising by the retailer. It is also observed that all three cases of advertising create a positive impact on the environment and enhance the profit of the supply chain in comparison to the case of non-advertising. Further, this paper presents the sensitivity analysis to understand the impact of market size, price elasticity, cross-price elasticity, and purchase cost on the total supply chain profit for all the three instances of advertising.