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The Economics of Remanufacturing Under Limited Component Durability and Finite Product Life Cycles

Author

Listed:
  • Roland Geyer

    () (Donald Bren School of Environmental Science & Management, University of California, Bren Hall 3426, Santa Barbara, California 93016)

  • Luk N. Van Wassenhove

    () (Technology Management, INSEAD, Boulevard de Constance, 77305 Fontainebleau, France)

  • Atalay Atasu

    () (Technology Management, INSEAD, Boulevard de Constance, 77305 Fontainebleau, France)

Abstract

This paper models and quantifies the cost-savings potential of production systems that collect, remanufacture, and remarket end-of-use products as perfect substitutes while facing the fundamental supply-loop constraints of limited component durability and finite product life cycles. The results demonstrate the need to carefully coordinate production cost structure, collection rate, product life cycle, and component durability to create or maximize production cost savings from remanufacturing.

Suggested Citation

  • Roland Geyer & Luk N. Van Wassenhove & Atalay Atasu, 2007. "The Economics of Remanufacturing Under Limited Component Durability and Finite Product Life Cycles," Management Science, INFORMS, vol. 53(1), pages 88-100, January.
    • Handle: RePEc:inm:ormnsc:v:53:y:2007:i:1:p:88-100
    DOI: 10.1287/mnsc.1060.0600
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    File URL: http://dx.doi.org/10.1287/mnsc.1060.0600
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    References listed on IDEAS

    as
    1. L. Beril Toktay & Lawrence M. Wein & Stefanos A. Zenios, 2000. "Inventory Management of Remanufacturable Products," Management Science, INFORMS, vol. 46(11), pages 1412-1426, November.
    2. Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, vol. 15(5), pages 215-227, January.
    3. Guide, V. Daniel R. & Kraus, Mark E. & Srivastava, Rajesh, 1997. "Scheduling policies for remanufacturing," International Journal of Production Economics, Elsevier, vol. 48(2), pages 187-204, January.
    4. Swan, Peter L, 1970. "Durability of Consumption Goods," American Economic Review, American Economic Association, vol. 60(5), pages 884-894, December.
    5. Fleischmann, Moritz & Bloemhof-Ruwaard, Jacqueline M. & Dekker, Rommert & van der Laan, Erwin & van Nunen, Jo A. E. E. & Van Wassenhove, Luk N., 1997. "Quantitative models for reverse logistics: A review," European Journal of Operational Research, Elsevier, vol. 103(1), pages 1-17, November.
    6. 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.
    7. Erwin van der Laan & Marc Salomon & Rommert Dekker & Luk Van Wassenhove, 1999. "Inventory Control in Hybrid Systems with Remanufacturing," Management Science, INFORMS, vol. 45(5), pages 733-747, May.
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