Abstract: Considering the product process faces diseconomies of scales and the product demand can be disrupted for many reasons, we analyze the emergency channel decisions of closed-loop supply with production diseconomies under demand disruptions. Two decentralized decision models are given with manufacturer and retailer as collector respectively, and the results about the two models are compared to give the effective collecting structure. Furthermore, emergency revenue and expense sharing contracts are designed to coordinate the member's independent decision-making behavior in the two decentralized systems to improve their efficiency. The simulated analysis method is combined to examine the results and it is found that if the demand disruption is small, ordering quantity of new products and collecting quantity of used products in normal operation state have some robustness, if the demand disruption is large, they should be adjusted along the same direction with the disruption. In addition to this, the "double marginalization" problems in decentralized decision systems of two collection channels can be solved by the designed emergency revenue and expense sharing contracts. Meanwhile, each member can determine sharing proportion by bargaining to get improved Pareto profits. The numerical examples also analyze the impacts of demand disruptions, diseconomy coefficients and sharing proportion on equilibrium decisions. The results show that manufacturer's profits and system's total profits in decentralized decision system of manufacturer collection channel are greater than that in retailer collection channel system, and manufacturer make use of recycling products with higher proportion to produce remanufactured products. So, manufacturer prefers to collect used products directly. And the profits of each member and system decrease with the increase of diseconomy coefficient. These results provide some references for emergency equilibrium decisions and channel choice.

Key words: closed-loop supply chain, production diseconomies, demand disruption, emergency channel, Pareto improvement