Impact of the cannibalization effect between new and remanufactured products on supply chain design and operations

Yanzi Zhang and Zhi-Hai Zhang

IISE Transactions, 2019, vol. 51, issue 1, 22-40

Abstract: The cannibalization effect between new and remanufactured products impacts market demand and further influences supply chain design, which makes supply chain operations complex. This article studies the impact of cannibalization between new and remanufactured products on supply chain network design and operations by considering a joint pricing-location-inventory problem. A three-level supply chain network that consists of multi-distribution centers and retailers is considered. New and remanufactured products are supplied simultaneously. The problem is formulated as a nonlinear mixed-integer program and is then transformed into a conic quadratic mixed-integer program. An outer approximation-based solution approach is developed to solve the program. Extensive numerical experiments are conducted to explore the performance of the algorithm and the effects of market cannibalization on the supply chain network design and operations.

Date: 2019
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DOI: 10.1080/24725854.2018.1486055

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