Abstract: This paper studies the decision of the central and divided closed loop supply chains, a premium and penalty mechanism is designed, and the decision results of the premium and penalty mechanism based on collection rate and collection quantity are compared.The results showseveral conclusions.Firstly, the premium and penalty mechanism based on collection rate can enhance collection rate effectively, and lead to the decrease of the new products prices.Secondly, the premium and penalty mechanism based on collection quantity can enhance collection rate only under certain conditions, namely, the target collection rate is lower than certain level.Thirdly, the range of the increase for the mechanism based on collection quantity is lower than the mechanism based on collection rate.Finally, the premium and penalty mechanism based on collection rate is more effective than the premium and penalty mechanism based on collection quantity for the enhancing of the collection rate.

Key words: closed-loop supply chain, premium and penalty mechanism, collection, remanufacturing, coordination