Pricing and collecting decisions in a closed-loop supply chain with symmetric and asymmetric information Jie Wei a , Kannan Govindan b , Yongjian Li c,n , Jing Zhao d a General Courses Department, Military Transportation University, Tianjin 300161, PR China b Department of Business and Economics, University of Southern Denmark, DK-5230 Odense M, Denmark c Business School, Nankai University, Tianjin 300071, PR China d School of Science, Tianjin Polytechnic University, Tianjin 300160, PR China article info Keywords: Closed-loop supply chain Symmetric and asymmetric information Pricing and collecting decisions abstract The optimal decision problem of a closed-loop supply chain with symmetric and asymmetric information structures is considered using game theory in this paper. The paper aims to explore how the manufacturer and the retailer make their own decisions about wholesale price, retail price, and collection rate under symmetric and asymmetric information conditions. Four game models are established, which allow one to examine the strategies of each firm and explore the role of the manufacturer and the retailer in four different game scenarios under symmetric and asymmetric information structures. The optimal strategies in closed form are given under the decision scenarios with symmetric information; moreover, the first order conditions that the optimal retail price, optimal wholesale price, and optimal collection rate satisfy are given under the decision scenarios with asymmetric information. The results obtained under symmetric and asymmetric information conditions and some key model parameters used in this paper are analyzed using a numerical approach by which some managerial analysis are given. & 2013 Elsevier Ltd. All rights reserved. 1. Introduction Closed loop supply chain is defined as “from the perspective of the product total life cycle, integrating the traditional forward supply chain activities and a set of additional activities of reverse supply chain, i.e., designing, planning and controlling in the whole process from the acquisition and production to redistribution, in order to recapture additional values” [1,2]. The management of closed-loop supply chains has gained growing attention from both business and academic research because of environmental con- sciousness, environmental concerns, and stringent environmental laws in recent years. The closed-loop supply chain has certainly become a matter of strategic importance: an element that companies must consider in decision-making processes concerning the design and develop- ment of their supply chains [3]. A specific type of closed-loop supply chains is product manufacturing and remanufacturing supply chain. Product remanufacturing is the process that restores used products or product parts to an “as good as new” condition, after which they can be resold on the market of new products. In some industries, equipment manufacturers manage the product collection process in parallel with the distribution of new pro- ducts. For instance, Xerox has been a leader in reusing their high- value, end-of-lease copiers in the manufacturing of new copiers that meet the same strict quality standards [4]. Similar activities are undertaken by Hewlett Packard Corporation for computers and peripherals, and by Canon for print and copy cartridges. Remanu- facturing process may offer companies a unique opportunity to improve their profits on one hand and to serve social responsi- bility on the other hand. In 1996, Ford avoided disposal of more than 67,700 pounds of toner cartridges, and saved $180,000 in disposal costs, and Ford collected more than 332,000 pounds of toner cartridges for remanufacturing and saved $1.2 million from 1991 to 1997 [5]. According to a recent report by Global Industry Analysts (2010), global automotive manufacturing is growing, and by 2015, it is forecasted to reach US $104.8 billion. Such a strong growth in remanufacturing is also present in other industries, such as toner and ink jet cartridges, electrical equipments, consumer electronics, and furniture [6]. A number of researchers have shown interest in the manage- ment of this type of closed-loop supply chain. Savaskan et al. [7] addressed the problem of choosing the appropriate reverse chan- nel structure for the collection of used products from customers, and they modeled the problem as decentralized decision-making systems with the manufacturer being the Stackelberg leader. Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/caor Computers & Operations Research 0305-0548/$ - see front matter & 2013 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.cor.2013.11.021 n Corresponding author. Tel.: þ86 22 23505341; fax: þ86 22 23501039. E-mail addresses: weijie2288@163.com (J. Wei), gov@sam.sdu.dk (K. Govindan), liyongjian@nankai.edu.cn (Y. Li), zhaojing0006@163.com (J. Zhao). Please cite this article as: Wei J, et al. Pricing and collecting decisions in a closed-loop supply chain with symmetric and asymmetric information. Computers and Operations Research (2013), http://dx.doi.org/10.1016/j.cor.2013.11.021i Computers & Operations Research ∎ (∎∎∎∎) ∎∎∎–∎∎∎