Modelling dual-channel closed-loop supply chain considering production diseconomies

This paper studies the pricing selection and coordination strategies for dual-channel closed-loop supply chain (CLSC) considering production diseconomies. Under the centralized and decentralized decision-making, the decision models of CLSC of retailer recycling was constructed, the effects of the manufacturer’s production diseconomy and the sales competition between manufacturer and retailer on new product pricing and waste product recycling were analysed, the optimal pricing strategy of dual-channel CLSC was given, and a “two-part tariff” coordination contract was established based on centralized decision-making. The results indicate that the profits of each member are negatively correlated with the production diseconomy and positively correlated with the degree of sales competition, the direct sales volume of manufacturer is always more than twice that of retailer, and the stronger the competition degree is, the more obvious the advantage is. Further, within the range of contract parameters that the dominant manufacturer and retailer are willing to accept, the “two-part tariff” contract can effectively realize the coordination of dual-channel CLSC.