Optimizing high-tech product take-back schemes in a closed-loop supply chain

Abstract

Frequent product development is a solution to the shortened product lifecycles in the consumer electronics industry. It enables companies to maintain competitiveness and strengthen their market share. However, environmental concerns bring reverse logistics practices into focus. A take-back policy is a strategic reverse logistics activity known to foster market share; however, it poses various challenges and uncertainties. Considering uncertain demand, we introduced an innovative adoption model with two distinct take-back policies, trade-in and credit, to address challenges in multi-generation production planning. Inspired by real-world practices of companies like Apple and Samsung, our model first examines how trade-in programs drive repeat purchases and enhance market share, with credit-based programs to attract new customers. It then captures changes in demand, production planning, recovery decisions, and internal competition among multiple product generations. Distinct from previous conclusions, this study explores how producers can strategically manage demand for new generations to slow diffusion, thereby increasing refurbishment and recycling volumes over time. Our findings highlight the pivotal role of adaptive pricing strategies and production scalability in maximizing profitability and promoting sustainability in competitive high-tech industries.