Integrated pricing model of new and remanufactured products with joint considerations of quality, sales and collection effort, and return policy

Recently, remanufacturing programs have attracted a lot of attention due to benefits which can provide for both companies and environment. Most papers investigating pricing problem in closed-loop supply chain field (CLSC) supposed that reproduced items’ quality is identical to produced ones. However, in practice, these items are perceived as two different products from customers’ perspective. Therefore, this paper extends a joint pricing model of manufactured–remanufactured items regarding different demands for produced and reproduced items which have different price and quality. We incorporate sales price, quality level, advertisement, return policy, and cross demand into demand expansion for newly produced items, and we discuss the introduction of collection effort and return policy into the quantity of return function. In this study, we investigate two distinct models. In the first model, we presume that there is no remanufacturing, so manufacturer sells products to retailer, and after that, the retailer sells them to customers. In the second model, with-remanufacturing which is comprised of three members (i.e., manufacturer, retailer, and third party) is discussed. Based on two different models, two decentralized problems are discussed for analyzing the best solutions of price, quality, and effort. Managerial insights indicate that adding reverse channel can greatly benefit both companies and environment and can also enhance firm’s position in the competitive market. Further to managerial insights, we determine and compare the optimum solution of two models, and we discuss the model that most benefits the manufacturer, retailer, and customers, respectively. Then an example is provided to simulate the developed problems and run sensitivity analyses to draw some interesting conclusions.