EPR regulation and reverse supply chain strategy on remanufacturing

Abstract Concerning the emerging and development of remanufacturing industry, this paper investigates decision-makings of both the government and related enterprises. The social planner intervenes remanufacturing implementations, via environmental regulations and financial instruments, in a reverse supply chain consisting of a manufacturer and a recycler. A bi-level programming model of government and the supply chain system is established based on extended producer responsibility (EPR) principles. Incentives of channel members in the pursuit of profit maximization under governmental policies are discussed. Environmental regulations and financial measures stipulated by government are analyzed, with their impacts exerted on the reverse supply chain elaborated. The ideas and results indicate that supply chain members can be motivated to undertake environmentally friendly initiatives under proper policies, with actual remanufacturing rate enhanced and recovery effort strengthened, thus boosting the remanufacturing industry especially at its early stage.