Reverse Logistics Outsourcing Model Based on Principal-Agent Theory

Operating reverse logistics in enterprise better or not is directly related to customers´ satisfaction and loyalty. Therefore, many enterprises usually adopt a policy to outsource their reverse logistics in order to strengthen their competence in the market. How to design an incentive mechanism is a key problem in reverse logistics outsourcing management. Through the reputation effects model pursued by the agent and the ratchet effects model caused by the principal increasing the standard, the reverse logistics outsourcing mechanism is analyzed, and a relative performance contrast is put forward to weaken the ratchet effects to design the incentive mechanism which can get two-win between the principal and the agent.