The Partial Centralization Decision for ClosedLoop Supply Chain Coordination with Trade-In Strategy

Abstract

To explore the impact of partial centralization on supply chain performance, this study constructs a two-period game model of a closed-loop supply chain involving a manufacturer and an online retail platform participating in the trade-in strategy. Through mathematical modeling and numerical simulation methods, the optimal decisions were analyzed under conditions where the manufacturer partially owns the retail platform’s partial equity. This study finds that partial centralization yields the highest profits, followed by full centralization, with decentralized decisions yielding the lowest profits. Moderate centralization enhances overall profits by optimizing incentive mechanisms, whereas excessive ownership concentration reduces the flexibility of the retail platform, leading to a decline in profits. Additionally, product durability and trade-in subsidy significantly influence supply chain profitability: high-durability products reduce renewal frequency, while trade-in subsidy effectively stimulates consumer demand and increase overall profits. This study provides theoretical support and practical guidance for companies implementing the trade-in strategy.