Pricing Strategy for Reproduction of Worn-out Ball and Gate Valves in Oil and Gas Industry: Using Game Theory on Four Closed-loop Supply Chain Scenarios

Articles in Press

Document Type : Article

Authors

Department of Industrial Engineering, Central Tehran Branch, Islamic Azad University, Tehran Iran

Abstract

Collecting and remanufacturing worn-out products provide significant financial advantages. In this research, we examine how remanufacturing worn-out ball and gate valves, which are important pieces of equipment in the oil and gas industry, could improve the profitability of the closed-loop supply chain. In this regard, four different scenarios for collecting and remanufacturing processes are considered: (1) the manufacturer collects the worn-out product from the consumers and remanufactures them, (2) the retailer collects the worn-out products and both manufacturer and retailer remanufacture them, (3) the third party collects the worn-out products and both manufacturer and third party remanufacture them, and (4) the manufacturer collects the worn-out products without remanufacturing them. To formulate the interactions of the CLSC members under the four different scenarios, we use the Nash and Manufacturer-Stackelberg games. Accordingly, the optimal decision variables i.e., the acquisition price, wholesale price, and retail price are calculated under four scenarios. Then, the optimal solutions are compared in four scenarios. In addition, the optimal profit of the closed-loop supply chain and members are obtained under the different scenarios. The results show that in the Nash game, Scenario 2 is the best scenario. However, in the Stackelberg game, Scenario 3 is the best scenario.

Keywords

References

  1. References:

    1. Modak, N. M., Modak, N., Panda, S., & Sana, S. S. “Analyzing structure of two-echelon closed-loop supply chain for pricing, quality and recycling management”, Journal of Cleaner Production, 171, pp. 512-528 (2018).
    2. Wan, N., & Hong, D. “The impacts of subsidy policies and transfer pricing policies on the closed-loop supply chain with dual collection channels”, Journal of Cleaner Production, 224, 881-891 (2019).
    3. Huang, X. L., Liu, L., Gu, B. Q., Shao, C. L., & Zhou, J. F. “Remanufacturing of High Temperature Ball Valve by Surface Engineering Technology”, In Advanced Materials Research, 97, pp. 1381-1384 (2010).
    4. Hosseini-Motlagh, S. M., Ebrahimi, S., & Zirakpourdehkordi, R. “Coordination of dual-function acquisition price and corporate social responsibility in a sustainable closed-loop supply chain”, Journal of Cleaner Production, 251, 119629, (2020).
    5. Mondal, C., & Giri, B. C. “Pricing and used product collection strategies in a two-period closed-loop supply chain under greening level and effort dependent demand”, Journal of cleaner production, 265, 121335 (2020).
    6. Chen, C. K., & Akmalul'Ulya, M. “Analyses of the reward-penalty mechanism in green closed-loop supply chains with product remanufacturing”, International Journal of Production Economics, 210, pp. 211-223 (2019).
    7. Savaskan, R. C., Bhattacharya, S., & Van Wassenhove, L. N. “Closed-loop supply chain models with product remanufacturing”, Management science, 50(2), pp. 239-252 (2004).
    8. Amiri, M., Sadjadi, S., Tavakkoli-Moghaddam, R., Jabbarzadeh, A. “Optimal fleet composition and mix periodic location-routing problem with time windows in an offshore oil and gas industry: A case study of National Iranian Oil Company”, Scientia Iranica, 26, pp. 522-537 (2019).
    9. Alabyev, V., Kruk, M., Bazhina, T., Semenov, A., Demin, V. “Economic efficiency of the application of artificial air cooling for normalization of thermal conditions in oil mines”, Scientia Iranica 27, 1606-1615 (2020).
    10. Farshad, F., Garber, J., Rieke, H., Komaravelly, S. “Predicting Corrosion in Pipelines, Oil Wells and Gas Wells; a Computer Modeling Approach”, Scientia Iranica, 17, pp. 86-96 (2010).
    11. Giri, B. C., Chakraborty, A., & Maiti, T. “Pricing and return product collection decisions in a closed-loop supply chain with dual-channel in both forward and reverse logistics”, Journal of manufacturing systems, 42, pp. 104-123 (2017).
    12. Hosseini-Motlagh, S. M., Johari, M., Ebrahimi, S., & Rogetzer, P. “Competitive channels coordination in a closed-loop supply chain based on energy-saving effort and cost-tariff contract”, Computers & Industrial Engineering, 149, pp. 106763 (2020).
    13. Govindan, K., & Popiuc, M. N. “Reverse supply chain coordination by revenue sharing contract: A case for the personal computers industry”, European Journal of Operational Research, 233(2), pp. 326-336 (2014).
    14. Maiti, T., & Giri, B. C. “Two-way product recovery in a closed-loop supply chain with variable markup under price and quality dependent demand”, International Journal of Production Economics, 183, pp. 259-272 (2017).
    15. Hosseini-Motlagh, S. M., Nouri-Harzvili, M., Johari, M., & Sarker, B. R. “Coordinating economic incentives, customer service and pricing decisions in a competitive closed-loop supply chain”, Journal of Cleaner Production, 255, 120241 (2020).
    16. Hosseini-Motlagh, S. M., Nouri-Harzvili, M., Choi, T. M., & Ebrahimi, S. “Reverse supply chain systems optimization with dual channel and demand disruptions: Sustainability, CSR investment and pricing coordination”, Information Sciences, 503, pp. 606-634 (2019).
    17. Hosseini-Motlagh, S. M., Nami, N., & Farshadfar, Z. “Collection disruption management and channel coordination in a socially concerned closed-loop supply chain: A game theory approach”, Journal of cleaner production, 276, 124173 (2020).
    18. Bulmuş, S. C., Zhu, S. X., & Teunter, R. H. “Optimal core acquisition and pricing strategies for hybrid manufacturing and remanufacturing systems”, International Journal of Production Research, 52(22), pp. 6627-6641 (2014).
    19. Li, J., Wang, Z., Jiang, B., & Kim, T. “Coordination strategies in a three-echelon reverse supply chain for economic and social benefit”, Applied Mathematical Modelling, 49, pp. 599-611 (2017).
    20. Zheng, B., Yang, C., Yang, J., & Zhang, M. “Pricing, collecting and contract design in a reverse supply chain with incomplete information”, Computers & Industrial Engineering, 111, pp. 109-122 (2017).
    21. Hosseini-Motlagh, S. M., Nematollahi, M., Johari, M., & Choi, T. M. “Reverse supply chain systems coordination across multiple links with duopolistic third party collectors”, IEEE Transactions on Systems, Man, and Cybernetics: Systems, 50(12), pp. 4882-4893 (2019).
    22. Hong, X., Xu, L., Du, P., & Wang, W. “Joint advertising, pricing and collection decisions in a closed-loop supply chain”, International Journal of Production Economics, 167, pp. 12-22 (2015).
    23. Xu, J., & Liu, N. “Research on closed loop supply chain with reference price effect”, Journal of Intelligent Manufacturing, 28(1), pp. 51-64 (2017).
    24. Morgenstern, O. & Von Neumann, J. “Theory of games and economic behavior”, (Princeton university press, 1953).
    25. Leng, M. & Parlar, M. “Game theoretic applications in supply chain management: a review”, INFOR: Information Systems and Operational Research. 43, pp. 187–220 (2005).
    26. Yue, X. & Raghunathan, S. “The impacts of the full returns policy on a supply chain with information asymmetry”, European Journal of Operational Research, 180, pp. 630–647 (2007).
    27. Xiong, W. “Coordination and incentives in a supply chain with manufacturer quality effort”, in The 26th Chinese Control and Decision Conference (2014 CCDC) 3557–3561 (IEEE, 2014).
    28. Zhang, C., You, M. & Han, G. “Integrated supply chain decisions with credit-linked demand-A Stackelberg approach”, Scientia Iranica, 28, pp. 927-949 (2021).
    29. Noori-Daryan, M., Taleizadeh, A. A. & Rabbani, M. “Optimal pricing in the presence of advance booking strategies for complementary supply chains”, Scientia Iranica, 27, pp. 1616–1633 (2020).
    30. Amirtaheri, O., Zandieh, M. & Dorri, B. “A bi-level programming model for decentralized manufacturer-distributer supply chain considering cooperative advertising”, Scientia Iranica, 25, pp. 891–910 (2018).
    31. Huang, Y. & Wang, Z. “Closed-loop supply chain models with product take-back and hybrid remanufacturing under technology licensing”, Journal of cleaner production, 142, pp. 3917–3927 (2017).
    32. Nazari, L., Seifbarghy, M. & Setak, M. “Modeling and analyzing pricing and inventory problem in a closed-loop supply chain with return policy and multiple manufacturers and multiple sales channels using game theory”, Scientia Iranica. Transaction E, Industrial Engineering, 25, pp. 2759–2774 (2018).
    33. Maiti, T., & Giri, B. C. “A closed loop supply chain under retail price and product quality dependent demand”, Journal of Manufacturing Systems, 37, pp. 624-637 (2015).
    34. Taleizadeh, A. A., Moshtagh, M. S., & Moon, I. “Optimal decisions of price, quality, effort level and return policy in a three-level closed-loop supply chain based on different game theory approaches”, European Journal of Industrial Engineering, 11(4), pp. 486-525 (2017).
    35. Jian, J., Li, B., Zhang, N., & Su, J. “Decision-making and coordination of green closed-loop supply chain with fairness concern”, Journal of Cleaner Production, 298, 126779 (2021).
    36. Rezaei, S., & Maihami, R. “Optimizing the sustainable decisions in a multi-echelon closed-loop supply chain of the manufacturing/remanufacturing products with a competitive environment”, Environment, Development and Sustainability, 22(7), pp. 6445-6471 (2020).
    37. Asl-Najafi, J., & Yaghoubi, S. “A novel perspective on closed-loop supply chain coordination: Product life-cycle approach”, Journal of Cleaner Production, 289, 125697 (2021).
    38. Mwandiya, B.K., Jha, J.K., Thakkar, J.J. “Optimal production-inventory policy for closed-loop supply chain with remanufacturing under random demand and return”, Operational Research, 42(1), (2018).
    39. Zhao, S, Zhu, Q. “Remanufacturing supply chain coordination under the stochastic manufacturability rate and the random demand”, Annals of Operations Research, 257(1-2), pp. 661-695, (2017).
    40. Oraiopoulos, N., Ferguson, M. E. & Toktay, L. B. “Relicensing as a secondary market strategy”, Management Science, 58, pp. 1022–1037 (2012).
    41. Atasu, A., Sarvary, M. & Van Wassenhove, L. N. “Remanufacturing as a marketing strategy”. Management science, 54, pp. 1731–1746 (2008).
    42. Larsen, S. B., Masi, D., Feibert, D. C. & Jacobsen, P. “How the reverse supply chain impacts the firm’s financial performance”, International Journal of Physical Distribution & Logistics Management, (2018).
    43. Wei, J., & Zhao, J. “Pricing and remanufacturing decisions in two competing supply chains”, International Journal of Production Research, 53, pp. 258-78 (2014).
Scientia Iranica

Articles in Press, Accepted Manuscript
Available Online from 27 February 2022

Files

History

  • Receive Date: 22 November 2020
  • Revise Date: 16 November 2021
  • Accept Date: 27 February 2022

Share

How to cite

Statistics