Strategy of Recycling Waste Resource with Governmental Incentives and Funds

The collection of used products and subsequent remanufacturing has been increasingly encouraged by government incentives and funds. Assuming new products stochastic demands and end-of-products stochastic returns, a reverse supply chain recycling system led by government is established. Recycling fund from manufacturers, government subsidies and a target rebate-punish contract between government and recyclers are designed. Based on games theory and optimization theory, the optimal decisions are obtained in both decentralized and centralized conditions respectively. Finally, the performance of the proposed solution method has been demonstrated by a numerical simulation. By the economic consequences of these decisions, managerial insights and economic implications relevant to policy makers are obtained.