Optimization of reverse supply chain with used-product collection effort under fairness concerns

Fairness is a hot topic in the field of behavior operations, as it has been shown playing an important role in developing and maintaining channel relationships. This paper considers a reverse supply chain consisting of a remanufacturer and a collector. The remanufacturer delegates the collection of used product to the collector who has a fairness concern. That is, the collector´s utility is not only related to his own profit but also the difference to the remanufacturer´s profit. We explore the optimal decisions of the wholesale price from the remanufacturer and the collection effort from the collector in the decentralized scenario, and compare them with the centralized scenario. We investigate the effects of fairness parameters and show that under a certain condition the channel coordination can be achieved by this simple wholesale price contract.