Optimal centralized and decentralized ordering policies with remanufacturing and market signal

This paper studies a single-season two-period supply chain with market signal and remanufacturing between two periods. The decider has two opportunities in period 2 after observing market signal which updates the demand forecast. One is to manufacture a normal product, the other is to remanufacture the left-over inventory of the first period. We consider the centralized and decentralized system. In the centralized system, we derive the optimal ordering policy. In the decentralized system, we show that the revenue-sharing contracts can be amended simply to coordinate our supply chain with remanufacturing. Finally, we analyze the effect of market signal and remanufacturing in the supply chain through numerical examples. We can find the monotonicity behaviors of the optimal first-period order quantity and the optimal expected profit with respect to the quality of information. With remanufacturing in the system, the expected profit increases.