Reverse Supply Chain Management Through a Quantity Flexibility Contract: A Case of Stochastic Remanufacturing Capacity

This article investigates a two-echelon reverse supply chain (RSC) where third-party logistics provider charges customers to return outdated products. A green manufacturer refurbishes qualified returned products through the remanufacturing process. Remanufacturing capacity is considered stochastic variable. Under volatility of capacity, some likely examined, and could not be remanufactured. If collected product cannot processed, it should salvaged at lower value perceived as lost profit. In such scenarios, increasing quantity suitable if there strong possibility enough in paper develops model identify optimal order under diverse contracts, including wholesale price, centralized, flexibility contracts. contract, supplier might cancel its preliminary restricted quantity. Additionally, offers above initial minimize understocking during peak seasons. Our numerical experiments demonstrate that suggested can coordinate examined RSC capacity. Contrary centralized more practical alternative from perspective participants’ profitability.