Optimal production and pricing strategies for a remanufacturing firm

Liu, Zhuojun; Chen, Jing; Diallo, Claver

doi:10.1016/j.ijpe.2018.07.015

Cited by 71 publications

(36 citation statements)

References 44 publications

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“…Based on the assumption that the presence of remanufactured products and the identity of remanufacturers influence the consumers' perceived value of new products, Li et al [29] considered the product life cycle in the context of OEMs' decision whether to remanufacture themselves, and the corresponding pricing strategy. Liu et al [30] proposed a model to analyze the optimal pricing strategies for a monopolistic manufacturer who engages in remanufacturing. Kleber et al [31] studied the robustness of the assumption that consumers' willingness to pay for remanufactured products is a fraction of that for new products, and then analyzed the pricing strategy and quality choice of new products for three different remanufacturing scenarios simultaneously.…”

Section: Pricing Strategy For Closed-loop Supply Chainsmentioning

confidence: 99%

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

et al. 2020

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Due to the increasing awareness of sustainable manufacturing, remanufacturing has been widely accepted by enterprises in many countries. In the process of Closed-Loop Supply Chain (CLSC) development, to stimulate the demand for remanufactured products, the Chinese government’s interventions such as the “Trade old for Remanufactured” program cannot be ignored. However, prior research has not answered the questions of whether governments should offer consumption subsidies and how to determine the optimal subsidy value. This paper investigates the optimal government consumption subsidy policy and its impact on the operation of Closed-Loop Supply Chain (CLSC) where an Original Equipment Manufacturer (OEM) produces new products, while a Third-Party Remanufacturer (TPR) remanufactures the used products collected from consumers. A game model with a leader (government) and two followers (OEM and TPR) is then introduced. The government determines the consumption subsidy to maximize the social welfare, while the TPR and OEM attempt to maximize their own profit functions. Game theoretic models are proposed to explore and compare the scenarios, i.e., CLSC with a consumption subsidy policy and without a consumption subsidy policy. The equilibrium characteristics with respect to the government’s consumption subsidy decisions and the price decisions for chain members are derived. Based on the theoretical and numerical analysis, the results show that: (1) governments should not always offer a consumption subsidy; (2) the consumption subsidy cannibalizes demand for new products while boosting the demand for remanufactured products; (3) the consumption subsidy should be shared between the TPR and consumers when the TPR raises the sales price of remanufactured product; (4) the members of the CLSC do not always benefit from the consumption subsidy policy.

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Section: Pricing Strategy For Closed-loop Supply Chainsmentioning

confidence: 99%

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

et al. 2020

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“…Liu et al. (2018) propose a model to discuss the firms’ optimal quantity and price when an OEM remanufactures. Zheng et al (2019) employ a theoretic model to analyze the impact of the design of environment on the OEM or the IR's quantity decisions in monopolistic and competitive scenarios.…”

Section: Literature Reviewmentioning

confidence: 99%

The prices and quality of new and remanufactured products in a new market segment

Qiao

2020

Int Trans Operational Res

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This paper studies the optimal prices and quality of new and remanufactured products, and especially discusses the quality adjustment of the original equipment manufacturer (OEM) in a new market segment that consists of the indifferent segment and the new product only segment. Consumers in the first segment have the same willingness to pay for new and remanufactured products, while consumers in the second segment are only willing to purchase new products. We use the proportion of consumers in the indifferent segment accounting for all consumers to segment the market. We present game models and employ backward induction to derive the optimal prices and quality in three scenarios: the monopolist OEM no‐remanufacturing, the monopolist OEM remanufacturing, and an OEM no‐remanufacturing but an independent remanufacturer (IR) remanufacturing. When the OEM or the IR remanufactures, we find that the OEM cannot lower the product quality. In addition, we compare the optimal quality between the unsegmented and segmented market for each scenario. The results show the OEM should increase its product quality under certain conditions after the OEM realizes that there is a segmented market. Furthermore, we conduct numerical analyses to discuss the impact of related parameters on practitioners’ profits, which provides more guidelines for practitioners.

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“…Liao and Deng [36] provided a theoretical foundation for remanufacturers to develop optimal remanufacturing strategies using an EES-EOQ model. Liu et al [37] determined when the company should produce new products, remanufactured products or both at the same time, and the impact of customers' perception of new products and remanufactured products was revealed by developing a two-stage production and pricing model. In contrast to [37], we studied the process of obtaining cores in a uncertain environment.…”

Section: B Remanufacturingmentioning

confidence: 99%

Self-Remanufacturing or Outsourcing? Hybrid Manufacturing System With Remanufacturing Options Under Yield Uncertainty

2019

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Yield uncertainty widely exists in manufacturing industries. Because of the particularities of the recovery and production processes, remanufacturing is seriously affected by the uncertainty of the production process, which also affects the remanufacturing choice of enterprises. In this paper, we focus on the case where a make-to-order type manufacturer is confronted with the strategic option of obtaining core materials by self-remanufacturing or outsourcing new cores. Through a stochastic modelling approach, a two-echelon closed-loop supply chain is constructed to capture the manufacturer's sourcing strategy and production planning by considering yield uncertainty in both the remanufacturing and production stages. We first examine the case of a deterministic recovery rate. The results show that regardless of whether the firm chooses to remanufacture or buy new core materials, the expected profit of the (re)manufacturer is always concave. Then, in the case of a random recovery rate, we show that the distribution bounds are important and play key roles in deciding the strategic option of self-remanufacturing or outsourcing. By comparing the upper and lower bounds of the recovery rate with the procurement cost of new raw material and used product, three production/sourcing strategies, namely, using remanufactured cores only, outsourcing new material only and jointly using the two materials, are investigated. The optimal procurement quantity and the optimal production input are derived to maximize the (re)manufacturer's expected profits under the three scenarios. Finally, we perform sensitivity analysis of the impact of yield uncertainty on the optimal results. The results show that when the shortage cost increases, the collection quantity increases faster than the production input, which implies that a ''bullwhip effect'' exists in the proposed two-period collection and production system. The conclusions of this paper can be applied to remanufacturing in related enterprises to provide production and procurement decision support for managers and to promote the efficiency of closed-loop supply chains.INDEX TERMS Remanufacturing, outsourcing, recovery rate, yield uncertainty.

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Optimal production and pricing strategies for a remanufacturing firm

Cited by 71 publications

References 44 publications

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer

The prices and quality of new and remanufactured products in a new market segment

Self-Remanufacturing or Outsourcing? Hybrid Manufacturing System With Remanufacturing Options Under Yield Uncertainty

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