SOP Model of Remanufacture Subsidy and Supply Chain Decisions Under Take-back Directive

Recovery and remanufacturing activities are very important and subsidy policy of government plays an important role in these activities. The study of different remanufacture subsidy schemes of government under the take-back directive and their influence on stakeholders' decisions is carried out in this paper. By using the SOP model of remanufacture subsidy to investigate the best subsidies scheme, there are three forms of remanufacture subsidies scheme: (i) Subsidies to manufacturer, (ii) Subsidies to recycler, and (iii) Subsidies to consumers. A comparison is made to show that their impacts on different stakeholders can be quite different, and it is better for government to subsidies recycler than that to subsidies manufacture from the perspective of total profits of the supply chain members. The particularity of subsidies to consumers is also taken into consideration and how contribution factor affect government's final decisions is clarified.