Pareto Improvement in a Dual-Channel Closed-Loop Supply Chain System by Integrating Product Sustainability and Consumer Focus

Abstract

Closed-loop supply chain systems have gained significant attention in recent years due to their potential for environmental and economic benefits. This study unveils customer-oriented economic measures and ensures environmental sustainability in a closed-loop dual-channel supply chain (CL-DCSC) model system comprised of a single manufacturer and retailer. This investigation combines closed-loop aspects of collecting used products from numerous consumers with dual-channel processes incorporating the uncertainty in market demand and raw-material cost. The proposed model includes the return rate of used products as a crucial factor in addition to considering wholesale, retail, and online sale prices for making informed decisions. This study utilizes an uncertain parameter defuzzification technique with fuzzy possibility measures to globally maximize the expected net earnings of the whole supply chain (SC) in a centralized decision-making scenario and the expected net earnings of every participant in a decentralized decision-making scenario. Extensive numerical simulation reveals that the CL-DCSC model corresponds to stakeholders' desired eco-friendly, customer- oriented, and profitable strategy in the centralized decision-making scenario. The study demonstrates that adopting a two-part tariff (TPT) contract can facilitate rational decision-making among stakeholders, aligning their interests with the centralized strategy. Furthermore, this study provided a mathematical approach for measuring contract fairness, Pareto improvement, and coordination efficiency. The outcomes confirm that the contract is fair, facilitates Pareto improvement, and effectively coordinates the CL-DCSC. The model emphasizes the importance of developing a CL-DCSC framework, suggesting that collaborative partnerships are more beneficial than competitive approaches. The findings encourage businesses to prioritize sustainable practices, such as recycling and product returns, which can lead to cost reductions and improved profitability. Understanding and integrating consumer preferences into SC strategies can enhance customer satisfaction and loyalty, benefiting overall SC performance.