Dynamic pricing models for used products in remanufacturing with lost-sales and uncertain quality

Yu Xiong, Gendao Li, Yu Zhou, Kiran Fernandes, Richard Harrison and Zhongkai Xiong

International Journal of Production Economics, 2014, vol. 147, issue PC, 678-688

Abstract: In this paper, we investigate the remanufacturing problem of pricing single-class used products (cores) in the face of random price-dependent returns and random demand. Specifically, we propose a dynamic pricing policy for the cores and then model the problem as a continuous-time Markov decision process. We first design a basic model that does not consider the quality uncertainty of cores, and then extend our model to incorporate this factor. Besides proving optimal policy uniqueness and establishing monotonicity results for the optimal policy, we also characterize the impact of system parameters on the optimal policies, which can provide simple managerial insights. Finally, we use computational experiments to assess the benefits of dynamic pricing compared to static pricing and identify the impacts of specific parameters on the relative merits of dynamic pricing policy.

Keywords: Remanufacturing; Dynamic pricing; Markov decision process (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:147:y:2014:i:pc:p:678-688

DOI: 10.1016/j.ijpe.2013.04.025

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