Investigation on Pricing Decisions of Remanufactured Products and Profit of Supply Chain

Abstract

This study investigates the closed-loop supply chain (CLSC) with respect to hybrid manufacturing/remanufacturing systems. In this study, a hybrid manufacturing/remanufacturing model is designed that encompasses the simultaneous production of new manufactured products and remanufactured products; this model is used to investigate the profitability of a hybrid manufacturing/remanufacturing system. The impact on the demand for new products (cannibalization effect) caused by selling remanufactured products is a concern among companies with respect to promoting the CLSC. The purpose of this study is to examine the effects on the profits obtained by a company. Numerical experiments are conducted to confirm the profitability of a hybrid manufacturing/remanufacturing system; the relationship between the demand for manufactured products and that for re-manufactured products is also investigated. This study proposes a pricing model for remanufactured products by considering consumers’ willingness to pay. The analytical results indicate that the cannibalization effect was suppressed by considering these, and it is clear that remanufactured products increase company profits.