 Selling Assortments of Used Products to Third‐Party RemanufacturersAkshay Mutha, Saurabh Bansal and V. Daniel R. Guide Production and Operations Management, 2019, vol. 28, issue 7, 1792-1817 Abstract: This paper analyzes the business‐to‐business transactions in which a supplier sells assortments of used products to third‐party remanufacturers. The supplier offers used products in different quality conditions, called grades. We model this buyer–supplier transaction as a Stackelberg game in which the buyer chooses his optimal purchase quantity of various grades, and the supplier chooses the optimal assortment and the prices of the grades in the assortment anticipating buyer’s behavior. We first develop an analytically tractable solution to the buyer’s and supplier’s problems. Subsequently, we show several structural properties of the optimal assortment offered by the supplier, including (i) the optimal prices set by the supplier are such that high quality grades have a higher profit margin for the buyer; and (ii) the grades in the optimal assortment constitute a convex hull of the remanufacturing and acquisition costs. We also extend the results to the case when the supplier’s acquisition costs are marginally increasing in the quantity acquired. Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:28:y:2019:i:7:p:1792-1817 Ordering information: This journal article can be ordered from Access Statistics for this article Production and Operations Management is currently edited by Kalyan Singhal More articles in Production and Operations Management from Production and Operations Management Society |
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