Analysis of some incentives on two-echelon reverse supply chain with a strategic consumer: The case of unwanted medications in households

Abstract

In this article, there is established a reverse logistics (RL) system to collect unwanted medications (UMs) in households. A reverse supply chain (RSC) is proposed in a decentralized state including manufacturer, and retailer involving a strategic consumer. The novelty of this article is that the model is investigated from the consumer's perspective, whereas in the previous studies, the proposed models were from other upstream members' perspectives such as manufacturer and retailer. Furthermore, inducement and advertising strategies are proposed for stimulating consumers to engage more in an RSC. To analyse the effect of these two strategies, the three-person RSC game-theoretical approach is used. A three-person supply chain consists of a pharmaceutical manufacturer and a retailer who will interact with a strategic consumer in several non-cooperative Stackelberg games. Three Stackelberg games are established and, each member takes a turn as a leadership role and the other two players assume the role of the follower.