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.