A dual-channel secondary closed-loop supply chain considering retail groups and fairness concerns

by Yue Tan, Chunxiang Guo

The rise of retail groups has strengthened their voice in the supply chain, drawing more attention from supply chain members to the issue of profit fairness. To explore the influence of fairness concerns on operational decisions in closed-loop supply chains after the formation of retail groups. In this paper, we first construct a secondary dual-channel closed-loop supply chain led by a retail group and followed by a manufacturer. Next, the corresponding game models are constructed under three scenarios, namely, fairness neutrality (FN), fairness concerns of the retail groups (FR), and fairness concerns of the manufacturer (FM), respectively. Finally, the game models are solved and analyzed. It turns out that it is easier for the manufacturer to satisfy its demands for fairness by adjusting the wholesale price. Furthermore, we find that fairness concerns do not enhance the recycling rate of used products and the greenness of remanufacturing. For retail groups, fairness concerns can hurt their profits, but appropriate fairness concerns can contribute to profitable growth in their retail business. Interestingly, the manufacturer’s fairness concerns do not affect the total profitability of the supply chain system, but the retail group’s fairness concerns do. This paper identifies dual changes in the scope of operations and power structure of retail groups in closed-loop supply chains, as well as analyzes the fairness concerns raised by these changes, which will lead to new recommendations for operational decision-making in firms.