Demand Information Forecasting and Sharing in a Remanufacturing Closed-Loop Supply Chain

Abstract

We delve into the incorporation of demand information forecasting and the subsequent information sharing in a closed-loop supply chain (CLSC). We consider the competition between an original equipment manufacturer (OEM) and an independent remanufacturer (IR). The OEM autonomously determines whether to forecast demand information and further considers whether to disseminate the realized demand signal to the IR. We find that the IR adopts either a partial- or a full-remanufacturing strategy to compete with the OEM. The OEM shares negative demand signals with the IR, as such signals decrease the retail prices and increase the production quantity of all-new products. Additionally, the sharing of negative demand signals helps alleviate the cannibalization effect caused by the introduction of remanufactured products. When examining the optimal sharing strategy in equilibrium, the OEM only invests in forecasting demand if the forecasting cost is relatively low. Furthermore, the numerical studies reveal that, in equilibrium, the OEM does not necessarily benefit from possessing more precise demand information. Additionally, we assess the influence of consumers' environmental awareness on the production decisions of both companies. The findings indicate that heightened environmental awareness prompts the IR to adopt a full-remanufacturing strategy, and the information management strategies remain robust.