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Differentiation competition between new and remanufactured products considering third-party remanufacturing

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  • Xiaochen Sun
  • Yancong Zhou
  • Yongjian Li
  • Kannan Govindan
  • Xiaonan Han

Abstract

In general, customers may perceive that qualities and reliabilities of new and remanufactured products are different, so the activities of taking back and remanufacturing used products by OEMs (Original Equipment Manufacturers) have a negative effect on themselves. Thus, these activities are executed by third-party remanufacturers, but which will lead to the competition between the new and remanufactured products. However, the customers' points to new and remanufactured products are different. For example, customers who are interested in the new product are mainly sensitive to the price, whereas those who prefer the remanufactured product are more sensitive to the quality and reliability. Based on the idea, a differentiation competition between the new and remanufactured products is considered in this paper. We consider the decentralized decisions framework with one manufacturer, one remanufacturer, and one retailer. In this framework, the manufacturer decides the wholesale price of new products, and the remanufacturer determines the warranty period of remanufactured products, and they sell their products to the retailer who decides the retail prices of two products. We provide the properties of the equilibrium decisions, and investigate the effects of parameters on the equilibrium decisions by using theoretical and numerical methods.

Suggested Citation

  • Xiaochen Sun & Yancong Zhou & Yongjian Li & Kannan Govindan & Xiaonan Han, 2020. "Differentiation competition between new and remanufactured products considering third-party remanufacturing," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 71(1), pages 161-180, January.
    • Handle: RePEc:taf:tjorxx:v:71:y:2020:i:1:p:161-180
    DOI: 10.1080/01605682.2018.1512843
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    Cited by:

    1. Zhang, Guangxia & Gong, Yeming & Hong, Xianpei, 2022. "Free rider effect of quality information disclosure in remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    2. Xiaojiao Qiao & Xiukun Zhao & Jinhui Zou, 2021. "Remanufacturing Marketing Decisions in the Presence of Retailing Platforms in the Carbon Neutrality Era," IJERPH, MDPI, vol. 19(1), pages 1-18, December.
    3. Liu, Zhuojun & Chen, Jing & Diallo, Claver & Venkatadri, Uday, 2021. "Pricing and production decisions in a dual-channel closed-loop supply chain with (re)manufacturing," International Journal of Production Economics, Elsevier, vol. 232(C).
    4. Yanbin Du & Guohua He & Bo Li & Zhijie Zhou & Guoao Wu, 2022. "In-service machine tool remanufacturing: a sustainable resource-saving and high-valued recovery approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(1), pages 1335-1358, January.
    5. Mao, Huiying & Wang, Wenbin & Liu, Conghu & Xu, Yi & Zhao, Shuiying, 2023. "Effects of the carbon emission quota policy on the quality and sales of manufactured and remanufactured products," International Journal of Production Economics, Elsevier, vol. 266(C).
    6. Deepak Singhal & Sarat Kumar Jena & Satyabrata Aich & Sushanta Tripathy & Hee-Cheol Kim, 2021. "Remanufacturing for Circular Economy: Understanding the Impact of Manufacturer’s Incentive under Price Competition," Sustainability, MDPI, vol. 13(21), pages 1-19, October.
    7. Jena, Sarat Kumar & Meena, Purushottam, 2022. "Competitive sustainable processes and pricing decisions in omnichannel closed-up supply chains under different channel power structures," Journal of Retailing and Consumer Services, Elsevier, vol. 69(C).
    8. Yongming Zhang & Weida Chen, 2022. "Optimal production and financing portfolio strategies for a third‐party remanufacturing supply chain with capital constraint," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3072-3094, October.
    9. Alyahya, Mansour & Agag, Gomaa & Aliedan, Meqbel & Abdelmoety, Ziad Hassan & Daher, Maya Mostafa, 2023. "A sustainable step forward: Understanding factors affecting customers’ behaviour to purchase remanufactured products," Journal of Retailing and Consumer Services, Elsevier, vol. 70(C).

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