Product Reuse in Innovative Industries

Abstract

M ost models of product reuse do not consider the fact that firms might be required to innovate their products over time in order to continue to appeal to the tastes of customers. We consider how the rate of this required innovation, which might be fast or slow depending on the product, affects reuse decisions. We consider two types of reuse-remanufacturing to original specifications, and upgrading used items by replacing components that have experienced innovation since the item was originally produced. We find that optimal reuse decreases with the rate of innovation, implying that models that ignore innovation overestimate the optimal amount of reuse that a company should pursue. Furthermore, we show that reuse can be encouraged in two ways-the intuitive approach of increasing end-of-life costs, and the less intuitive approach of raising the cost to make items reusable. We also examine the environmental impact of reuse, measured in terms of virgin material usage, finding that reuse can actually increase total virgin material usage in some cases. In an extension, we show how the results and insights change when the rate of innovation is uncertain.

Design of the Reverse Channel for Remanufacturing: Must Profit‐Maximization Harm the Environment?

“…The additional buyers can be segmented into two pools: those who would otherwise have bought new but instead buy the remanufactured item (good for the environment) and those who thought the new item was too expensive but are willing to buy the remanufactured item (bad for the environment since remanufacturing's environmental harm, while less than that of new manufacturing, is not zero). Galbreth et al (2013) make such an argument. The following two conditions justify our approach: (a) We consider the environmental impact of only the manufacturing/remanufacturing process and not the buyer's use of the item.…”

The Environmental Impacts of Reuse: A Review

“…). More recently, several researchers echo Parker and Butler's (, 3) sentiment that remanufacturers upgrade “products from old to current [energy efficiency] standards,” such as Blazek and colleagues () and Linton and Johnston () with respect to telecommunications equipment, Atasu and colleagues () with respect to photocopiers, and Galbreth and colleagues () for fast‐moving consumer goods.…”

Pricing Decision for Unsold New and Remanufactured Products With Optimal Production Planning

“…Bhattacharya, Guide, and Wassenhove propose a study on remanufacturing across new product generation in the aspect of optimal order quantities in different channel decision-making structures [15]. Galbreth, et al fill up the gap and take the quality of used items and production design into account [16]. Kwak and Kim provide a market positioning problem for remanufactured product combined with optimal planning for part upgrades with paying an attention to the influence of production design in a waste-stream system and a market-driven system [17].…”