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Green closed-loop supply chain optimization strategy considering CER and incentive-compatibility theory under

Jianquan Guo1, Guanlan Wang2, Mitsuo Gen3

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Summary

Government subsidies and corporate green investment optimize green closed-loop supply chains. Subsidies encourage higher green investment, boosting profits and environmental willingness, unlike investment alone.

Keywords:
CPLEX & Genetic algorithmcorporate environmental responsibilitygovernment differential weight subsidyincentive-compatibilityuncertain demands and recovery quality

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Area of Science:

  • Operations Research
  • Environmental Management
  • Supply Chain Management

Background:

  • Market uncertainties in demand and quality challenge green closed-loop supply chains (GCL-SCS).
  • Corporate environmental responsibility (CER) and government differential weight subsidies (GDWS) are key factors influencing GCL-SCS performance.

Purpose of the Study:

  • To construct a total profit model for GCL-SCS under uncertainty, incorporating CER and GDWS.
  • To explore optimal subsidy allocation and green investment levels using incentive-compatibility theory.

Main Methods:

  • Fuzzy chance-constrained programming (FCCP) to model uncertainties.
  • Genetic algorithm (GA) and CPLEX for finding approximate optimal solutions.

Main Results:

  • Enterprises can adapt recycling, production, and sales strategies to demand.
  • Without subsidies, higher green investment decreases profits and recycling rates, reducing environmental willingness.
  • With optimal subsidies (0.34-0.41 for consumers), higher green investment increases profits, recycling rates, and environmental willingness.

Conclusions:

  • Government subsidies are crucial for aligning corporate green investment with environmental goals.
  • A combined strategy of government subsidy policy and corporate green investment optimizes GCL-SCS performance and stakeholder utility.
  • In uncertain environments, this integrated approach mitigates the limitations of individual strategies.