Pricing and collection for printer cartridge recycling under retailers’ ordering and collection

Abstract This paper models printer cartridge recycling with a framework of a closed-loop supply chain consisting of a leading manufacturer and two competing retailers, which investigates the dynamics of the manufacturer's pricing, including both wholesale price for new cartridges and transfer price for collected ones, and retailers' ordering and collection strategies. The analysis shows a negative correlation between the wholesale price and the number of retailers engaged in the collection; it also shows that the collection effort is negatively correlated with the wholesale price and positively correlated with the transfer price under low and moderate pricing. A case study of original HP ink cartridges in the U.S. demonstrates that (i) the manufacturer and retailers reach their maximum profits with less ordering and collection under low pricing; retailers' ordering and collecting are most stimulated under moderate pricing but the manufacturer and retailers have lower profits compared with low pricing; (ii) price reduction strategy is the best way for the manufacturer to deal with the increase of manufacturing costs under low and moderate pricing; (iii) under low pricing, the return reward is paid by the manufacturer at the transfer price, not by retailers, resulting in limited effects on their decisions; however, this reward is extremely detrimental to place orders and take collection under moderate pricing.