Monopoly Production Optimization Problem with Product Lifetime and Market Segmentation for Closed-loop Supply Chains

The production optimization model is investigated in monopoly manufacturing/remanufacturing environment. At first, based on the thinking of total life cycle in closed-loop supply chains, the definition of product lifetime is introduced and the relationship is analyzed among product lifetime, remanufacturable products, remanufactured products and newly manufactured products. Secondly, the customer preference coefficient is incorporated to describe the market segmentation between newly manufactured products and remanufacturable products and price competition and market demand functions are developed. Further, multi-period production model aiming at profit maximization is established subject to the market segmentation, the impact of product lifetime on the remanufacturable products and nonnegative characters of production. Moreover, the theorem that the model is convex programming problem is verified, and then K-T conditions are given. Finally, a numerical computation is presented to illustrate the properties and the conclusions of the model offer a decision-making support for production optimization of closed-loop supply chains.