Managing new and differentiated remanufactured products

• Published in: European journal of operational research Vol. 203; no. 2; pp. 370 - 379
• Main Authors: Ferrer, Geraldo, Swaminathan, Jayashankar M.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.06.2010; Elsevier; Elsevier Sequoia S.A
• Series: European Journal of Operational Research
• Subjects: Applied sciences; Differentiated products; Exact sciences and technology; Firm modelling; Monopolies; Monopoly; Multi-period horizon; Operational research and scientific management; Operational research. Management science; Operations research; Pricing policies; Product development; Product differentiation; Product portfolio; Remanufacturing; Remanufacturing Differentiated products Monopoly Product portfolio Multi-period horizon; Studies; Differentiated products; Monopoly; Multi-period horizon; Remanufacturing; Product portfolio; New product; Optimal policy; Monopole; Finite horizon; Optimal strategy; Product structure; Pricing; Infinite horizon; Planning; Recycling; Firm strategy
• ISSN: 0377-2217; 1872-6860
• DOI: 10.1016/j.ejor.2009.08.007

We study a firm that makes new products in the first period and uses returned cores to make remanufactured products (along with new products) in future periods. The remanufactured product is differentiated from the new product, so the firm needs to choose differentiated prices. We analyze the monopoly environment in two-period, multi-period (three, four and five) and infinite planning horizons, and characterize the optimal remanufacturing and pricing strategy for the firm. In the process, we identify remanufacturing savings thresholds that determine the production and pricing strategy for the firm. Among other results, we find—counter to intuition—that in a finite-horizon, multi-period setting, the optimal policy is not necessarily monotone in remanufacturing savings.