Matching Demand and Supply to Maximize Profits from Remanufacturing

The profitability of remanufacturing depends on the quantity and quality of product returns and on the demand for remanufactured products. The quantity and quality of product returns can be influenced by varying quality-dependent acquisition prices, i.e., by using product acquisition management. Dem...

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Bibliographic Details
Published inManufacturing & service operations management Vol. 5; no. 4; pp. 303 - 316
Main Authors Guide, V. Daniel R., Jr, Teunter, Ruud H, Van Wassenhove, Luk N
Format Journal Article
LanguageEnglish
Published Linthicum INFORMS 01.10.2003
Institute for Operations Research and the Management Sciences
SeriesManufacturing & Service Operations Management
Subjects
Econometric Models
Econometrics
Product Acquisition
Product returns
Profit maximization
Profitability
Remanufacturing
Studies
Supply & demand
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Summary:The profitability of remanufacturing depends on the quantity and quality of product returns and on the demand for remanufactured products. The quantity and quality of product returns can be influenced by varying quality-dependent acquisition prices, i.e., by using product acquisition management. Demand can be influenced by varying the selling price. We develop a simple framework for determining the optimal prices and the corresponding profitability. We motivate and illustrate our framework using an application from the cellular telephone industry.
ISSN:1523-4614
1526-5498
DOI:10.1287/msom.5.4.303.24883