Impact of end of lease contracts’ option on joint pricing and inventory decisions of remanufacturable leased products

Abstract

Leasing currently plays an important role for the global economy. The equipment leasing earning acquired through leasing rather than cash or credit, has reached a dominant level. With this regards, this paper represents a basic mixed-integer non-linear programming model. The study deliberates a firm that leases new products and remanufactured leased merchandises. The proposed study considers the end of lease contract, which contains several options: Return the leased product, return the used product and purchase other remanufactured product and buying the leased product. The primary objective is to maximize the discrepancy between the revenue and the costs of a firm, which leases new products as well as selling remanufactured ones. The product deteriorates with time and the difference between a new and used good is obvious. The product must undergo a remanufacturing procedure before being sold as a remanufactured product.