The impact of product proliferation in reverse supply chain

In a highly competitive market, product variety is one of the most important competitive advantages. However, excessive product proliferation will hurt firm's profit. Hence, how to manage product variety to maximize profit becomes an important issue. In a closed-loop supply chain, product proliferation not only impacts the forward supply chain, but also the reverse one. Although increasing number of product types will satisfy customer's divers needs better, complexity of product recycling, remanufacturing, and resale process may erode firm's profit. In this research, we develop a mathematical model to analyze a capacitated reverse supply chain, consisting of single remanufacturer and multiple retailers. The closed-form solutions for optimal batch size and maximal profit are found. The managerial insights regarding how number of products and other factors impact batch size and profit are discussed. In addition, the relationship between product proliferation and the choice of logistic strategies is also investigated.