IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v193y2017icp602-616.html
   My bibliography  Save this article

Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy

Author

Listed:
  • Han, Xiaohua
  • Yang, Qianxia
  • Shang, Jennifer
  • Pu, Xujin

Abstract

Due to its environmental, financial, and marketing benefits, businesses and governments have increasingly embraced remanufacturing. However, the weak demand for remanufactured (reman) product severely hinders the implementation of remanufacturing. Lately, Trade-Old-for-Remanufactured (TOR) programs are growing in popularity as they can boost reman product demand. In this paper, we investigate the conditions when a firm should offer a TOR program and how to best implement it. Our main findings are: (1) Firms should offer TOR programs only when reman product receptivity and new product durability satisfy a certain condition; (2) In addition to the reman product receptivity, the new product durability also plays a significant role in motivating consumers to participate in TOR programs; and finally (3) High product remanufacturability and government subsidies are strong incentives for firms to offer their TOR programs. Our analysis provides insights for firms and governments on how to use TOR programs to benefit businesses, consumers, and the environment.

Suggested Citation

  • Han, Xiaohua & Yang, Qianxia & Shang, Jennifer & Pu, Xujin, 2017. "Optimal strategies for trade-old-for-remanufactured programs: Receptivity, durability, and subsidy," International Journal of Production Economics, Elsevier, vol. 193(C), pages 602-616.
    • Handle: RePEc:eee:proeco:v:193:y:2017:i:c:p:602-616
    DOI: 10.1016/j.ijpe.2017.07.025
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527317302426
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2017.07.025?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ma, Wei-min & Zhao, Zhang & Ke, Hua, 2013. "Dual-channel closed-loop supply chain with government consumption-subsidy," European Journal of Operational Research, Elsevier, vol. 226(2), pages 221-227.
    2. Daniel A. Levinthal & Devavrat Purohit, 1989. "Durable Goods and Product Obsolescence," Marketing Science, INFORMS, vol. 8(1), pages 35-56.
    3. Geraldo Ferrer & Jayashankar M. Swaminathan, 2006. "Managing New and Remanufactured Products," Management Science, INFORMS, vol. 52(1), pages 15-26, January.
    4. Mitra, Subrata, 2016. "Models to explore remanufacturing as a competitive strategy under duopoly," Omega, Elsevier, vol. 59(PB), pages 215-227.
    5. Ferrer, Geraldo & Swaminathan, Jayashankar M., 2010. "Managing new and differentiated remanufactured products," European Journal of Operational Research, Elsevier, vol. 203(2), pages 370-379, June.
    6. Vishal V. Agrawal & Mark Ferguson & L. Beril Toktay & Valerie M. Thomas, 2012. "Is Leasing Greener Than Selling?," Management Science, INFORMS, vol. 58(3), pages 523-533, March.
    7. Wu, Cheng-Han, 2012. "Product-design and pricing strategies with remanufacturing," European Journal of Operational Research, Elsevier, vol. 222(2), pages 204-215.
    8. Jerome Adda & Russell Cooper, 2000. "Balladurette and Juppette: A Discrete Analysis of Scrapping Subsidies," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 778-806, August.
    9. C. Kieren Mayers & Chris M. France & Sarah J. Cowell, 2005. "Extended Producer Responsibility for Waste Electronics: An Example of Printer Recycling in the United Kingdom," Journal of Industrial Ecology, Yale University, vol. 9(3), pages 169-189, July.
    10. Chen, Jen-Ming & Chang, Chia-I, 2012. "The co-opetitive strategy of a closed-loop supply chain with remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(2), pages 387-400.
    11. Atalay Atasu & Miklos Sarvary & Luk N. Van Wassenhove, 2008. "Remanufacturing as a Marketing Strategy," Management Science, INFORMS, vol. 54(10), pages 1731-1746, October.
    12. Mitra, Supriya & Webster, Scott, 2008. "Competition in remanufacturing and the effects of government subsidies," International Journal of Production Economics, Elsevier, vol. 111(2), pages 287-298, February.
    13. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
    14. Miao, Zhaowei & Fu, Ke & Xia, Zhiqiang & Wang, Yu, 2017. "Models for closed-loop supply chain with trade-ins," Omega, Elsevier, vol. 66(PB), pages 308-326.
    15. Raghunath Singh Rao & Om Narasimhan & George John, 2009. "Understanding the Role of Trade-Ins in Durable Goods Markets: Theory and Evidence," Marketing Science, INFORMS, vol. 28(5), pages 950-967, 09-10.
    16. Xiao, Yongbo, 2017. "Choosing the right exchange-old-for-new programs for durable goods with a rollover," European Journal of Operational Research, Elsevier, vol. 259(2), pages 512-526.
    17. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    18. Ann van Ackere & Diane J. Reyniers, 1995. "Trade-ins and Introductory Offers in a Monopoly," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 58-74, Spring.
    19. Han, Xiaohua & Wu, Haiyan & Yang, Qianxia & Shang, Jennifer, 2016. "Reverse channel selection under remanufacturing risks: Balancing profitability and robustness," International Journal of Production Economics, Elsevier, vol. 182(C), pages 63-72.
    20. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    21. Heese, Hans S. & Cattani, Kyle & Ferrer, Geraldo & Gilland, Wendell & Roth, Aleda V., 2005. "Competitive advantage through take-back of used products," European Journal of Operational Research, Elsevier, vol. 164(1), pages 143-157, July.
    22. Robotis, Andreas & Bhattacharya, Shantanu & Van Wassenhove, Luk N., 2005. "The effect of remanufacturing on procurement decisions for resellers in secondary markets," European Journal of Operational Research, Elsevier, vol. 163(3), pages 688-705, June.
    23. Saibal Ray & Tamer Boyaci & Necati Aras, 2005. "Optimal Prices and Trade-in Rebates for Durable, Remanufacturable Products," Manufacturing & Service Operations Management, INFORMS, vol. 7(3), pages 208-228, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhen Wang & Yongrui Duan & Jiazhen Huo, 2020. "Impact of Trade-In Remanufacturing Policy and Consumer Behavior on Remanufacturer Decisions," Sustainability, MDPI, vol. 12(15), pages 1-18, July.
    2. 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).
    3. Yufei Hu & Lianghua Chen & Yingying Chi & Bowen Song, 2022. "Manufacturer encroachment on a closed‐loop supply chain with design for remanufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1941-1959, September.
    4. Kaiying Cao & Tsan‐Ming Choi, 2022. "Optimal Trade‐in Return Policies: Is it Wise to be Generous?," Production and Operations Management, Production and Operations Management Society, vol. 31(3), pages 1309-1331, March.
    5. Cao, Kaiying & Han, Guoxin & Xu, Bing & Wang, Jia, 2020. "Gift card payment or cash payment: Which payment is suitable for trade-in rebate?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 134(C).
    6. Xin Yan & Xiaohua Han, 2022. "Optimal pricing and remanufacturing entry strategies of manufacturers in the presence of online reviews," Annals of Operations Research, Springer, vol. 316(1), pages 59-92, September.
    7. Dong, Rong & Wang, Nengmin & Jiang, Bin & He, Qidong, 2023. "Within-brand or cross-brand: The trade-in option under consumer switching costs," International Journal of Production Economics, Elsevier, vol. 255(C).
    8. Shin, Youngchul & Lee, Sangyoon & Moon, Ilkyeong, 2020. "Robust multiperiod inventory model considering trade-in program and refurbishment service: Implications to emerging markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 138(C).
    9. Özden Tozanlı & Elif Kongar & Surendra M. Gupta, 2020. "Evaluation of Waste Electronic Product Trade-in Strategies in Predictive Twin Disassembly Systems in the Era of Blockchain," Sustainability, MDPI, vol. 12(13), pages 1-33, July.
    10. Wang, Nengmin & He, Qidong & Jiang, Bin, 2019. "Hybrid closed-loop supply chains with competition in recycling and product markets," International Journal of Production Economics, Elsevier, vol. 217(C), pages 246-258.
    11. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    12. Fan, Xiaojun & Guo, Xin & Wang, Shanshan, 2022. "Optimal collection delegation strategies in a retail-/dual-channel supply chain with trade-in programs," European Journal of Operational Research, Elsevier, vol. 303(2), pages 633-649.
    13. Konstantaras, Ioannis & Skouri, Konstantina & Benkherouf, Lakdere, 2021. "Optimizing inventory decisions for a closed–loop supply chain model under a carbon tax regulatory mechanism," International Journal of Production Economics, Elsevier, vol. 239(C).
    14. Xiaohua Han & Ying Shen & Yiwen Bian, 2020. "Optimal recovery strategy of manufacturers: Remanufacturing products or recycling materials?," Annals of Operations Research, Springer, vol. 290(1), pages 463-489, July.
    15. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    16. Zhang, Yunrong & Hong, Zhaofu & Chen, Zhixiang & Glock, Christoph H., 2020. "Tax or subsidy? Design and selection of regulatory policies for remanufacturing," European Journal of Operational Research, Elsevier, vol. 287(3), pages 885-900.
    17. Zhou, Yu & Xiong, Yu & Jin, Minyue, 2021. "Less is more: Consumer education in a closed-loop supply chain with remanufacturing," Omega, Elsevier, vol. 101(C).
    18. Tong Shu & Chunfen Huang & Shou Chen & Shouyang Wang & Kin Keung Lai, 2018. "Trade-Old-for-Remanufactured Closed-Loop Supply Chains with Carbon Tax and Government Subsidies," Sustainability, MDPI, vol. 10(11), pages 1-25, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ma, Peng & Gong, Yeming & Mirchandani, Prakash, 2020. "Trade-in for remanufactured products: Pricing with double reference effects," International Journal of Production Economics, Elsevier, vol. 230(C).
    2. Ehsan Shekarian & Simme Douwe Flapper, 2021. "Analyzing the Structure of Closed-Loop Supply Chains: A Game Theory Perspective," Sustainability, MDPI, vol. 13(3), pages 1-32, January.
    3. Xiaohua Han & Ying Shen & Yiwen Bian, 2020. "Optimal recovery strategy of manufacturers: Remanufacturing products or recycling materials?," Annals of Operations Research, Springer, vol. 290(1), pages 463-489, July.
    4. Xiong, Yu & Zhou, Yu & Li, Gendao & Chan, Hing-Kai & Xiong, Zhongkai, 2013. "Don’t forget your supplier when remanufacturing," European Journal of Operational Research, Elsevier, vol. 230(1), pages 15-25.
    5. Zhao, Senlin & You, Zhuangzhuang & Zhu, Qinghua, 2021. "Quality choice for product recovery considering a trade-in program and third-party remanufacturing competition," International Journal of Production Economics, Elsevier, vol. 240(C).
    6. Quan, Yuting & Hong, Jiangtao & Song, Jingpu & Leng, Mingming, 2021. "Game-theoretic analysis of trade-in services in closed-loop supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    7. Cetin, Can Baris & Zaccour, Georges, 2023. "Remanufacturing with innovative features: A strategic analysis," European Journal of Operational Research, Elsevier, vol. 310(2), pages 655-669.
    8. Zu-Jun Ma & Qin Zhou & Ying Dai & Gao-Feng Guan, 2018. "To License or Not to License Remanufacturing Business?," Sustainability, MDPI, vol. 10(2), pages 1-21, January.
    9. Wu, Cheng-Han, 2015. "Strategic and operational decisions under sales competition and collection competition for end-of-use products in remanufacturing," International Journal of Production Economics, Elsevier, vol. 169(C), pages 11-20.
    10. Cheng-Han Wu, 2021. "Production-quality policy for a make-from-stock remanufacturing system," Flexible Services and Manufacturing Journal, Springer, vol. 33(2), pages 425-456, June.
    11. Fuqiang Zhang & Renyu Zhang, 2018. "Trade-in Remanufacturing, Customer Purchasing Behavior, and Government Policy," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 601-616, October.
    12. Xue, Dongmei & Teunter, Ruud H. & Zhu, Stuart X. & Zhou, Weihua, 2021. "Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores," Omega, Elsevier, vol. 99(C).
    13. De, Arijit & Ray, Ankita & Kundu, Tanmoy & Sheu, Jiuh-Biing, 2023. "Is it wise to compete or to collaborate? Remanufacturing business models under collective extended producer responsibility legislation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).
    14. Kangzhou Wang & Yingxue Zhao & Yonghong Cheng & Tsan-Ming Choi, 2014. "Cooperation or Competition? Channel Choice for a Remanufacturing Fashion Supply Chain with Government Subsidy," Sustainability, MDPI, vol. 6(10), pages 1-19, October.
    15. Li, Yongjian & Feng, Lipan & Govindan, Kannan & Xu, Fangchao, 2019. "Effects of a secondary market on original equipment manufactures’ pricing, trade-in remanufacturing, and entry decisions," European Journal of Operational Research, Elsevier, vol. 279(3), pages 751-766.
    16. Ying Wu & Youwei Li, 2022. "Competition or Authorization—Manufacturers’ Choice of Remanufacturing Strategies," Sustainability, MDPI, vol. 14(19), pages 1-29, October.
    17. Wu, Xiaole & Zhou, Yu, 2019. "Buyer-specific versus uniform pricing in a closed-loop supply chain with third-party remanufacturing," European Journal of Operational Research, Elsevier, vol. 273(2), pages 548-560.
    18. Huang, Yanting & Wang, Zongjun, 2017. "Values of information sharing: A comparison of supplier-remanufacturing and manufacturer-remanufacturing scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 20-44.
    19. Lijun Meng & Qiang Qiang & Zuqing Huang & Baoyou Zhang & Yuxiang Yang, 2020. "Optimal Pricing Strategy and Government Consumption Subsidy Policy in Closed-Loop Supply Chain with Third-Party Remanufacturer," Sustainability, MDPI, vol. 12(6), pages 1-29, March.
    20. Xiao, Lu & Wang, Xian-Jia & Chin, Kwai-Sang, 2020. "Trade-in strategies in retail channel and dual-channel closed-loop supply chain with remanufacturing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:193:y:2017:i:c:p:602-616. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.