A Pricing Model and Contract Design for Recycling Used Home Appliances in Accordance with the Retailer’s Collecting Method

Using the price for recycling used home appliances as a variable in the decision-making process, this paper studies the pricing decision-making process of the home appliances enterprises when a wholesale and retail price for the green home appliances have already been determined in advance. Considering the influences of the effective recycle behavior of the used home appliances to the whole supply chain, a game model about the recycle pricing for the used home appliances is presented in accordance with the retailer’s collecting method. Then a revenue and expense-sharing contract is designed to coordinate the supply chain so as to improve the performance of the green supply chain in terms of the recycle of the used home appliances

On how the acquisition of recoverable parts influences the profitability of spare parts management for durables

In the management of spare parts for durables OEMs often face a sharp decline in sales of spare parts when the warranty period of their products ends. One reason for this effect is given by the high profitability of the after sales market which attracts competitors. If the competitors’ main sourcing option consists of repairing used or broken parts, an acquisition of those parts by the OEM might lower competition and increase sales. The purpose of this paper is to provide a case-based framework to offer insights on the opportunity of recovering parts. We consider a two-stage supply chain, where independent repair shops are responsible for handling the repair process. There are two options to meet spare parts demand: repair shops may replace the part with a new one (ordered from the OEM) or they may use a part that they repaired before. While repair shops achieve a larger profit by repairing parts, the OEM would prefer the use of new parts. However, he has no control on demand which might be obtained through buyback of broken parts. Furthermore, the OEM could recover these parts on a higher level, thus reducing production/procurement of new parts. The main contribution of this paper is to elaborate the important effects of recoverable items acquisition on spare parts demand by using a simple deterministic framework thus outlining the impact of different parameters on the profitability of spare parts management.Closed-Loop Supply Chains, Spare Parts, Competition in Product Recovery, Case Study

Dynamic buy-back for product recovery in end-of-life spare parts procurement

The efficient supply of spare parts is of prime concern for OEMs. Next to the traditional spare parts sources in form of final order and remanufacturing, the option to buy back broken products prevents the OEM from fulfilling his spare parts availability obligation in the end-of-life phase and increases his ability to remanufacture. This contribution seeks to identify optimal buy-back strategies for different settings regarding information availability and buy-back flexibility. A numerical study analyzes circumstances under which buy-back is especially beneficial for the OEM

Dynamic buy-back for product recovery in end-of-life spare parts procurement

The efficient supply of spare parts is of prime concern for OEMs. Next to the traditional spare parts sources in form of final order and remanufacturing, the option to buy back broken products prevents the OEM from fulfilling his spare parts availability obligation in the end-of-life phase and increases his ability to remanufacture. This contribution seeks to identify optimal buy-back strategies for different settings regarding information availability and buy-back flexibility. A numerical study analyzes circumstances under which buy-back is especially beneficial for the OEM.Inventory Management, Spare Parts Management, Reverse Logistics, Buy-back

Price competition with OEM-remanufactured products

Abstract Despite environmental and economic advantages of remanufacturing, the potential for cannibalizing the sales of new product by OEM-remanufactured products is a key obstacle for OEMs to remanufacture their end-of-life products. In this paper, we investigate the OEM-remanufacturing strategy and its impacts on price decisions by adopting a game-theoretic framework, where there is competition between a remanufacturer who sells third-party remanufactured products and an OEM who offers new products and chooses whether to introduce OEM-remanufactured products. We formulate consumer valuation for the products in the consideration of consumers' perceived similarity between the new and OEM-remanufactured products and, moreover, characterize the chain members' equilibrium pricing behavior concerning the availability of used products for remanufacturing. We elaborate the impacts of the entry of the OEM-remanufactured products on equilibrium results and show that the provision of OEM-remanufactured products is not necessarily harmful to the remanufacturer especially when consumers perceive the less similarity between the OEM's products. Results of this study intend to provide managerial insights for managers response to the changes in competitive dynamics, consumer characteristics, and cost factors

Applying Revenue Management to the Reverse Supply Chain

We study the disposition decision for product returns in a closed-loop supply chain. Motivated by the asset recovery process at IBM, we consider two disposition alternatives. Returns may be either refurbished for reselling or dismantled for spare parts. Reselling a refurbished unit typically yields higher unit margins. However, demand is uncertain. A common policy in many firms is to rank disposition alternatives by unit margins. We show that a revenue management approach to the disposition decision which explicitly incorporates demand uncertainty can increase profits significantly. We discuss analogies between the disposition problem and the classical airline revenue management problem. We then develop single period and multi-period stochastic optimization models for the disposition problem. Analyzing these models, we show that the optimal allocation balances expected marginal profits across the disposition alternatives. A detailed numerical study reveals that a revenue management approach to the disposition problem significantly outperforms the current practice of focusing exclusively on high-margin options, and we identify conditions under which this improvement is the highest. We also show that the value recovered from the returned products critically depends on the coordination between forward and reverse supply chain decisions.remanufacturing;revenue management;onderdelen;revenues;spare parts inventory

Strategic grading in the product acquisition process of a reverse supply chain

Most recommerce providers have moved to a quality-dependent process for the acquisition of used products. They acquire the products via websites at which product holders submit upfront quality statements and receive quality-dependent acquisition prices for their used devices. Motivated by this development of reverse logistics practice, the aim of this paper is to analyse the product assessment process of a recommerce provider in detail. To this end, we first propose a sequential bargaining model with complete information which captures the individual behaviour of the recommerce provider and the product holder. We determine the optimal strategies of the product holder and the recommerce provider in this game. We find that the resulting strategies lead to an efficient allocation, although the recommerce provider can absorb most of the bargaining potential due to his last mover advantage. In a second step, we relax the assumption of complete information and include uncertainty about the product holder's residual product value. We show the trade-off underlying the recommerce provider's optimal counteroffer decision and analyse the optimal strategy, using a logistic regression approach on a real-life data set of nearly 60,000 product submissions. The results reveal a significant improvement potential, compared to the currently applied strategy

Flexible versus simple trade-in strategy for remanufacturing

Some enterprises recently start to offer the flexible trade-in option to attract customers from competitors, in contrast to the simple one that only allows them to return used products to the same manufacturers for new. Based on analytical and numerical analyses, this study compares the environmental impacts of two trade-in strategies (simple versus flexible) in combination with different carbon tax policies. From the perspective of consumer switching behaviour, a Hotelling model with two market segments is established. Under the flexible trade-in strategy, the carbon emission of enterprises turns out to be significantly higher than that under the simple trade-in strategy. An appropriate carbon tax policy, especially with preferential tax rates on green products, is capable of guiding enterprises to choose a more environment-friendly trade-in strategy included in the model. The findings fill the research gap in comparing the pros and cons of simple and flexible trade-in strategies in terms of sustainable development, and provide managers and policy-makers the insights on how to promote the healthy development of the remanufacturing industry with trade-in strategizing and carbon taxation