Co-Opetition Strategy for Remanufacturing the Closed-Loop Supply Chain Considering the Design for Remanufacturing

Abstract

The co-opetition strategy between manufacturers and remanufacturers is a key problem of the closed-loop supply chain, especially for the manufacturers often facing decision-making dilemmas when undertaking the environmental responsibilities of the design for remanufacturing (DfRem). Since DfRem is thought to be advantageous for recycling and remanufacturing, it will lower the production costs for remanufacturers but raise them for manufacturers. On the other hand, manufacturers cannot abandon the DfRem because of environmental responsibilities. This work thus formulates three two-period game models of the competition model with patent protection, the competition model without patent protection, and the cooperation model, which consists of a manufacturer and a remanufacturer, to investigate the decision of the manufacturer and remanufacturer co-opetition strategies. The price, the level of DfRem, the recovery rate, the profit, and other factors are compared across the three models using reverse induction and numerical simulation. In addition, we analyzed the influence of different equilibrium solutions on customer willingness to pay for remanufactured products. We find that cooperation not only contributes to the improvement of DfRem but is also the best choice to ensure the stable development of the supply chain system. Manufacturers, in particular, prefer to work together wherever feasible and actively pursue collaboration rather than advocating for patent protection to fend against remanufacturers, even when they have patent rights.