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Market Segmentation and Product Technology Selection for Remanufacturable Products

Author

Listed:
  • Laurens G. Debo

    (Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • L. Beril Toktay

    (College of Management, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Luk N. Van Wassenhove

    (Technology and Operations Management, INSEAD, 77305 Fontainebleau, France)

Abstract

Remanufacturing is a production strategy whose goal is to recover the residual value of used products. Used products can be remanufactured at a lower cost than the initial production cost, but consumers value remanufactured products less than new products. The choice of production technology influences the value that can be recovered from a used product. In this paper, we solve the joint pricing and production technology selection problem faced by a manufacturer that considers introducing a remanufacturable product in a market that consists of heterogeneous consumers. Our analysis discusses the market and technology drivers of product remanufacturability and identifies some phenomena of managerial importance that are typical of a remanufacturing environment.

Suggested Citation

  • 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.
  • Handle: RePEc:inm:ormnsc:v:51:y:2005:i:8:p:1193-1205
    DOI: 10.1287/mnsc.1050.0369
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    References listed on IDEAS

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    4. 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.
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