Investigating dual-channel green supply chain considering refurbishing process and product recycling with environmental awareness effort

The internet makes online purchasing convenient for consumers. Furthermore, low resources, greenhouse gas emissions, higher production costs, and various environmental issues compel firms to recycle products. This study proposes a dual-channel closed-loop supply chain comprising three members with the refurbishment of recovered products. The manufacturer has two production units (manufacturing and refurbishing) marketed online and traditional channels for fresh green products and only online for refurbished and returned products. The manufacturer uses green innovation technology to ensure that the product remains green. The recycler retrieves customers’ old products through an attractive buy-back price and environmental awareness. The study considers green level, promotion level, and selling price sensitive linear demand. This model is analyzed by comparing one centralized and eight decentralized scenarios (Stackelberg and Nash game approaches). Validation of the model is provided through a numerical example, and sensitivity analysis is performed to understand how critical parameters affect performance. This study found that the chain performance (i.e., the highest green level, the highest promotional effort level, and the highest chain profit) is optimal in the centralized system, proving that the system is highly efficient regarding environmental and economic benefits. The supply chain performance in the Nash game case where manufacturer and retailer play as a single-player is impressive and closer to the centralized model. Again, in another Nash game case where the retailer and recycler participate as a single member, a maximum number of products are recovered, which helps the recycler to achieve the highest profit.