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Coordination of a dual-channel closed-loop supply Chain with demand disruption under revenue-sharing contract

Author(s): Xie Dong-Chuan, Chen Hong

A manufacturer and a retailer coexist in a dual channel supply chain, where the retailer has a traditional channel and the manufacturer owns an online channel. In the dual channel, the manufacturer is also responsible for recycling remanufactured products. When the supply chain system is in a stable state, we calculate the optimal price, the sales quantity and the recovery rate. However, when demand disruption happens, the manufacturer does not need to adjust production planning within a certain range. In addition, the recovery rate and the change of demand disruption are negatively correlated. Under this circumstance, revenue-sharing contract in the stable state is no longer appropriate to coordinate the supply chain. Instead, an improved revenue-sharing contract is designed to coordinate the dual-channel closed-loop supply chain with the consideration of demand disruption

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