Remanufacturing Decisions with WTP Discrepancy and Uncertain Quality of Product Returns

Tong Shu, Jiajia Xu, Shou Chen, Shouyang Wang and Kin Keung Lai
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Tong Shu: Business School, Hunan University, Changsha 410082, China
Jiajia Xu: Business School, Hunan University, Changsha 410082, China
Shou Chen: Business School, Hunan University, Changsha 410082, China
Shouyang Wang: Academy of Mathematics and System Science, Chinese Academy of Sciences, Beijing 100190, China
Kin Keung Lai: International Business School, Shaanxi Normal University, Xi’an 710062, China

Sustainability, 2018, vol. 10, issue 7, 1-23

Abstract: In a remanufacturing system, the uncertain quality of the product returns tends to impact the manufacturer’s price of returns and remanufacturing. This article introduces the quality coefficient of waste products on the basis of the analysis of the structure of the remanufacturing cost. It explores the remanufacturing cost function, the recycling price function, and the recycling rate function. In the marketing process, new products compete with remanufactured products. Different consumers show different levels of degrees of acceptance of remanufactured products, contributing to the uncertainty of the willingness to pay for remanufactured products. The price of remanufactured products is always lower than that of new products, allowing price-sensitive consumers to turn to remanufactured products. This shows that product pricing has an impact on the market demand. Considering the difference between consumer willingness to pay and the quality of product returns, this article aims to construct a game model consisting of manufacturers, retailers, and consumers, with the manufacturers as leaders. The optimal pricing decisions of the production in supply chain members have been solved, and sensitivity of the model is analyzed through examples.

Keywords: remanufacturing; quality coefficients; willingness to pay; game model; production pricing decision (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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