Research on value of third-party reverse logistics

Original manufacturer can recycling returned products by himself or outsource this work to a third-party. Different recycling pattern have unequal impact on original manufacturer´s profit. Therefore, it is particular important for original manufacturer to determine whether he should cooperate with a third-party under fixed products´ price and yield. And it´s also important for original manufacturer to decide its price and yield to achieve optimal profits when recycling has already been outsourced to third-party. In this paper the entire reverse logistics is divided into early period of recycling and late period of core-parts remanufacturing. Using mathematical models and optimization methods, the paper studies products´ yield and price in order to achieve the optimal profit under two strategies: one of them is completing recycling independently by original manufacturers and another one is outsourcing some steps of the reverse logistics to the third-party. The paper also finds out the conditions which can optimize original manufacturer´s profit when recycling is outsourced to the third-party and educes the outsourcing price which can benefits both the original manufacturer and the third-party.