Optimal reverse channel for end-of-life vehicle closed-loop supply chains

This study examines a manufacturer selling directly to customers has three modes for acquiring end-of-life vehicles with a key component supplier: supplier-collection, manufacturer-collection, and third-party-collection modes. We find that the supplier, who is farther away from customers, is the optimal agent to be responsible for recovery activity. Following, we design a simple transfer price contract for the supplier-collection mode such that the recovery rate achieves the centralized level. Subsequently, a fixed payment is proposed to compensate the supplier, thereby realizing Pareto improvement. Finally, we consider the supplier as the Stackelberg leader and find opposite results regarding optimal reverse channel structure.