Decision and Coordination of Closed-loop Supply Chain with Dual Sale Channels Under the Constraints of Recycling Regulations

The government plays an important role in the formation and operation of closed-loop supply chain. To study the effects of recycling regulations on closed-loop supply chain with dual sale channels, the channel members' decisions are analyzed before and after implementation of regulations respectively. With the equilibrium outcome under centralized decision-making as a benchmark, a modified two-part pricing contract is proposed to coordinate the closed-loop supply chain with dual sale channels under the constraints of the recycling regulations.Through the comparison of the models, it is shown that the recycling regulations by the government can effectively increase the recycling quantity, while the government needs to set a reasonable reward and punishment mechanism to encourage the manufacturer to recycle. With enhancement of reward and punishment, the manufacturer's profits gained from coordination mechanisms will increase. Finally, a numerical example is applied to demonstrate the conclusions.