Optimal pricing and production strategies for new and remanufactured products under a non-renewing free replacement warranty

Zhuojun Liu, Claver Diallo, Jing Chen and Michael Zhang

International Journal of Production Economics, 2020, vol. 226, issue C

Abstract: Due to its economic and environmental benefits, the remanufacturing industry has become vital and popular worldwide. The demand for remanufactured products highly depends on their price and warranty coverage offered, as these two features are the two most important to customers for signaling value and quality of the remanufactured products. This paper identifies the conditions of the optimal pricing and production strategies for a monopolistic manufacturer under a non-renewing free replacement warranty for a two-period planning horizon. It is shown that the manufacturer’s engagement in the remanufacturing activities depends on the warranty length and the ratio of the production cost to the remanufacturing cost. Numerical experiments provide additional managerial insights and implications by investigating the sensitivity of the optimal solutions to changes in the length of the warranty period offered.

Keywords: Pricing; Remanufacturing strategy; Non-renewing free replacement warranty; Nonlinear optimization (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:226:y:2020:i:c:s0925527319304360

DOI: 10.1016/j.ijpe.2019.107602

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