Quality and Pricing Decisions in a Dual-Channel Closed-Loop Supply Chain Considering Imperfect Product Recycling

Abstract

Level of quality not only affects demand but also affects the proportion of imperfect products and then affects profit. This paper takes the quality level as a decision variable, considers both the consumer demand and the recovery of imperfect products in a dual-channel closed-loop supply chain (CLSC), and studies the significance of a revenue-sharing contract for coordination. The results show that the relationship between the optimal price and the quality level is affected by the repair cost of imperfect products and that the consumer’s attention to price and quality affects the trend of the overall profit with the quality level. In some cases, simply improving the quality level cannot expand the demand and is not even conducive to the improvement of green supply chain profits. It is also found that in both centralized and decentralized scenarios, coordination contracts can effectively motivate retailers to collect waste and help improve the economic efficiency of green supply chains.