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Optimal pricing and production strategies for new and remanufactured products under a non-renewing free replacement warranty

Author

Listed:
  • Liu, Zhuojun
  • Diallo, Claver
  • Chen, Jing
  • Zhang, Michael

Abstract

Due to its economic and environmental benefits, the remanufacturing industry has become vital and popular worldwide. The demand for remanufactured products highly depends on their price and warranty coverage offered, as these two features are the two most important to customers for signaling value and quality of the remanufactured products. This paper identifies the conditions of the optimal pricing and production strategies for a monopolistic manufacturer under a non-renewing free replacement warranty for a two-period planning horizon. It is shown that the manufacturer’s engagement in the remanufacturing activities depends on the warranty length and the ratio of the production cost to the remanufacturing cost. Numerical experiments provide additional managerial insights and implications by investigating the sensitivity of the optimal solutions to changes in the length of the warranty period offered.

Suggested Citation

  • Liu, Zhuojun & Diallo, Claver & Chen, Jing & Zhang, Michael, 2020. "Optimal pricing and production strategies for new and remanufactured products under a non-renewing free replacement warranty," International Journal of Production Economics, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:proeco:v:226:y:2020:i:c:s0925527319304360
    DOI: 10.1016/j.ijpe.2019.107602
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    References listed on IDEAS

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    Cited by:

    1. Adel A. Alamri, 2023. "A Sustainable Closed-Loop Supply Chains Inventory Model Considering Optimal Number of Remanufacturing Times," Sustainability, MDPI, vol. 15(12), pages 1-23, June.
    2. Shang, Lijun & Liu, Baoliang & Qiu, Qingan & Yang, Li, 2023. "Three-dimensional warranty and post-warranty maintenance of products with monitored mission cycles," Reliability Engineering and System Safety, Elsevier, vol. 239(C).
    3. Zhu, Ying & Xia, Tangbin & Hong, Ge & Chen, Zhen & Pan, Ershun & Xi, Lifeng, 2022. "Collaborative maintenance service and component sales under coopetition patterns for OEMs challenged by booming used-component sales," Reliability Engineering and System Safety, Elsevier, vol. 226(C).
    4. Jiawei Hu & Suqin Sun & Xuemei Zhang & Qiang Meng, 2022. "Optimal Extended Warranty Strategy: Provided by Manufacturer or E-Commerce Platform?," Sustainability, MDPI, vol. 14(19), pages 1-19, September.
    5. Liu, Zhuojun & Zhang, Michael & Chen, Jing & Diallo, Claver, 2023. "Buy now or later? New or remanufactured? How to attract strategic customers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    6. Yanrong Li & Lai Wei & Wei Jiang, 2021. "A Two-stage Pricing Strategy Considering Learning Effects and Word-of-Mouth," Papers 2110.11581, arXiv.org.
    7. Lijun Shang & Xiguang Yu & Yongjun Du & Anquan Zou & Qingan Qiu, 2022. "An Optimal Random Hybrid Maintenance Policy of Systems under a Warranty with Rebate and Charge," Mathematics, MDPI, vol. 10(18), pages 1-19, September.
    8. Zhen-Song Chen & Sheng Wu & Kannan Govindan & Xian-Jia Wang & Kwai-Sang Chin & Luis Martíınez, 2022. "Optimal pricing decision in a multi-channel supply chain with a revenue-sharing contract," Annals of Operations Research, Springer, vol. 318(1), pages 67-102, November.

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