Price and service competition between new and remanufactured products in a two-echelon supply chain

Wu, Cheng-Han

doi:10.1016/j.ijpe.2012.06.034

Cited by 255 publications

(129 citation statements)

References 41 publications

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“…Despite the emergence of pro-remanufacturing customers, some OEMs engage in remanufacturing only when it provides them with a niche and competitive market opportunities (Atasu et al, 2005;Atasu et al, 2010;Wu, 2012). For example, Bosch Tools (USA) decides to remanufacture only if the market share is small and the new product guarantees a high price premium (Atasu et al, 2005;Atasu et al, 2010).…”

Section: Marketmentioning

confidence: 99%

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Abdulrahman

Subramanian

Liu

et al. 2015

Journal of Cleaner Production

114

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Remanufacturing is a sustainable and proven profitable practice in the western world.Research on remanufacturing practices is relatively unexploited in China, despite being the "global factory" and both the world's largest automobile manufacturer and vehicle market.The increasing amount of automotive output and End-of-Life vehicles (ELVs) in China provides Chinese auto-parts companies with significant potential for environmentally conscious manufacturing and product recovery. Using case studies, we have investigated the status of remanufacturing practices, key determinants for strategic decision making to remanufacture in-house, outsource remanufacturing and/or not to engage in remanufacturing in Chinese auto parts firms using an analytical hierarchy process (AHP). This study suggests that Chinese firms are keen to adopt remanufacturing practice in-house compared to outsourcing despite a lack of technical and managerial capabilities.Key words: Remanufacturing, automotive, China, strategic decision making, analytical hierarchy process (AHP) INTRODUCTIONThe unprecedented and sometimes wasteful use of the environment as the natural provider of resources and sink for discarded end-of-life/end-of-use products and waste is proving to be unsustainable. There is increasing realization that manufacturing needs to produce more with less and different raw materials, to be ethical and sustainable. Achieving this will require materials wastage to be reduced and production to more closely match demand. This is why manufacturing firms, especially original equipment manufacturers (OEMs) and their suppliers, are under increasing pressure from stakeholders, including regulators, customers and employees to produce ethically, reuse/recycle, remanufacture, and/or to safely discard 3 their waste in accordance with the absorptive and regenerative capacity of the planet (Barker and Zabinsky, 2011).Of the many sustainable strategies, tools and techniques developed over the years aimed at improving productivity and economic longevity of manufacturing businesses, remanufacturing plays an important role. Remanufacturing has resulted in increased profits and market share for manufacturers in Western countries (Jayaraman and Luo, 2007;Giannetti, 2012). Remanufacturing further benefits businesses in terms of cost saving from reduced resource requirements, through assets recovery and reusing/recycling, cost savings from not using landfills, expanded product life cycle, increased employment rate and improved brand image (Sarkis, 2010;Kapetanopoulou and Tagaras, 2011;Zhang, et al., 2011).The automotive industry is one of the leading industries in remanufacturing and product recovery strategy, with 70% of all remanufacturing companies being in the automotive sector (Steinhilper, 2011;Zhang, et al., 2011). Furthermore, of all major products that are being The major motivation for this study is to (i) develop a remanufacturing decision-making framework for the Chinese auto-parts manufacturers' strategic decisions to either engage in the rem...

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Section: Marketmentioning

confidence: 99%

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Abdulrahman

Subramanian

Liu

et al. 2015

Journal of Cleaner Production

114

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“…They develop a dynamic programming formulation for determining the optimal price of remanufactured products, and optimal payment structure for the leased products. Other studies also assume that the demand of new products is different from that of the remanufactured products (Chen & Chang, 2012;Robotis et al, 2012;Wu, 2012aWu, , 2012b.…”

Section: Literature Reviewmentioning

confidence: 99%

A Decentralized Production/Remanufacturing Inventory Model with Multiple Refurbished Components

Hsueh¹

2015

EMR

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This study aims to investigate the optimal inventory and pricing policies in a decentralized production/remanufacturing system with multiple refurbished components. A basic inventory problem with deterministic demand rate and return rate is considered. The manufacturer purchases recycled components from the collector, and sells remanufactured products as well as new products to customers. It is assumed that the customers tend to pay different prices for remanufactured products and new products. Both the manufacturer and the collector try to maximize their own profits. The equilibrium of the problem is formulated as a variational inequality. Numerical examples show that the manufacturer and the collector can change the retail prices and return-facilitating costs to influence the product demands and the quantity of returned end-of-use products, such that no surplus or shortage of any products and components will occur.

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“…As popularly used in other literature such as [10,12] on price and service competition, here d 1 and d 2 are thought of as linear functions about prices and service levels. Thus, the demand functions could be described by incorporating price and service competition as follows.…”

Section: The General Optimal Modelmentioning

confidence: 99%

“…Apparently, the market demand of each product is an increasing function of his rival's retail price and his own service level, but a decreasing function of his own retail price and his rival's service level. As expressed in [10,12], if all else parameters are held equal, cutting p i by one unit will appeal to β p + γ p more customers: β p is the additional customers induced from a decrease in retail price of product i, and the remaining γ p customers are diverted from the rival product. It is obviously expounded by…”

Section: The General Optimal Modelmentioning

confidence: 99%

“…Xiao and Yang [1] develop a price-service competition model of two supply chains to investigate the optimal decisions of players under demand uncertainty. Wu [12] considers both price and service competition between new and remanufactured products in a two-echelon supply chain. The supply chain consists of two manufacturers, one produces the new products and another produces remanufactured products, and a common retailer.…”

Section: Introductionmentioning

confidence: 99%

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The Equilibrium Decisions in a Two-Echelon Supply Chain under Price and Service Competition

Han

Zhou

2014

Sustainability

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This article studies a supply chain composed of a manufacturer and two competing retailers. The manufacturer produces two substitutable products and offers respective service levels to customers who buy one of the two products. Each retailer can only order one kind of product from the manufacturer, and then sell them to the market at a certain sale price. The demands for two products are influenced not only by the service levels the manufacturer provides, but also the sales prices of the two products. Furthermore, we investigate the equilibrium behavior of members in the supply chain with the aid of the Stackelberg game, and discover a number of insights concerning some important parameters. Finally, Numerical analysis is presented to validate our theoretical results and compare channel performances.

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Price and service competition between new and remanufactured products in a two-echelon supply chain

Cited by 255 publications

References 41 publications

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies

A Decentralized Production/Remanufacturing Inventory Model with Multiple Refurbished Components

The Equilibrium Decisions in a Two-Echelon Supply Chain under Price and Service Competition

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