OPTIMAL PRODUCTION, PRICING AND AFTER-SALES SERVICE DECISIONS FOR NEW AND REMANUFACTURED PRODUCTS

Abstract

In 2015, the United Nations Member States adopted the 2030 Agenda for Sustainable Development with at its core 17 sustainable development goals (SDGs) to preserve the planet and its resources for future generations. Remanufacturing covers several of these SDGs and is one of the main operations of the circular economy. Remanufacturing has been adopted by (re)manufacturers to extend the life cycles of their products and reduce material, energy, and labour consumption. Remanufacturing has experienced significant growth over the past decades and is forecast to keep growing. However, some hurdles could soon hamper its development. Sales cannibalization between new and remanufactured products is one such obstacle that could prevent the remanufacturing industry from further developing. Consumers perceiving remanufactured products as having lower quality and performance than new ones could also reduce demand and force manufacturers to opt for less environmentally friendly value recovery options. To mitigate the negative effects of cannibalization, optimal pricing and retailing strategies should be designed for the competing new and remanufactured products. Appropriate after-sales services should be derived and offered to consumers to help alleviate their quality, performance, and safety concerns about the remanufactured products. This dissertation explores three themes dealing with the optimal pricing, production, retailing and after-sales service strategies for new and remanufactured products. The first theme investigates the manufacturer's optimal pricing and production decisions for the new and remanufactured products in a dual-channel supply chain with crosschannel and intrachannel competitions. The second theme deals with the optimal pricing and production decisions for new and remanufactured products sold with base warranty. Finally, the third theme extends the models developed under the first two themes to explore the optimal strategies for competing after-sales extended warranty services offered by the (re)manufacturer and retailer. Several mathematical models are built to explore the impacts of manufacturing and remanufacturing costs, and customers' willingness to pay for remanufactured products on the optimal prices, demand functions and warranty periods offered. This research addresses key issues in the pricing, production and retailing of remanufactured products. The results obtained provide academic and managerial insights to support efficient decision-making for organizations engaging in remanufacturing.