a game-theoretic approach for pricing considering sourcing, and recycling decisions in a closed-loop supply chain under disruption risk

Nowadays, pricing and sourcing under supply disruption risk playing a prominent role in the efficiency and responsiveness of a supply chain. however, being environmentally-responsible is a vital element in regard to reputation enhancement and passing legislative requirements. this paper investigates two competing supply chains: 1) a retailer with an expensive but reliable domestic supplier and cheap but unreliable foreign supplier regarding return products from customers, 2) a competitor with its integrated supplier, and return products. the retailer and competitor compete base on the game theory approach to decide on prices and return policies and prices when the retailer confronts to disruption risk by the foreign supplier. the reverse supply chain is addressed by asking retailer and competitor to collect used products for recycling by suppliers. the suppliers decide on the value paid for each product collected by retailers. the results indicate that, in the dual sourcing situation with increasing the percentage of external supply, the return rate of products increases. besides, the competitor and its integrated supplier have to use the return policy as leverage to revive in the competitive market.