Refund policies and core classification errors in the presence of customers’ choice behaviour in remanufacturing

Ou Tang, Yang Liu, Zhengang Guo and Shuoguo Wei

International Journal of Production Research, 2021, vol. 59, issue 12, 3553-3571

Abstract: In light of a circular economy, to encourage core returns, the remanufacturer charges a deposit and refund it to the customer based on quality inspection of cores. Generally, two types of classification errors exist and interact with each other during the inspection process: either low-quality cores are sorted as remanufacturable, or high-quality cores are sorted as non-remanufacturable. The remanufacturer needs to choose refund policies and determine a reasonable deposit value, considering customers’ potential responses. This paper firstly develops analytical solutions for these issues within a game theory framework. The effect of inspection information transparency is evaluated by comparing two settings: the information of inspection errors is available to customers or not. The study results show the advantage of inspection information transparency from the remanufacturer’s perspective. The analysis indicates the importance of avoiding overestimating customers’ payoff of products and the significance of inspection accuracy. The study also highlights that the salvage value of different cores significantly influences the remanufacturer’s profits, and the improvement of inspection accuracy does not necessarily reduce the customer’s return of low-quality cores.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2021.1894498 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:59:y:2021:i:12:p:3553-3571

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20

DOI: 10.1080/00207543.2021.1894498

Access Statistics for this article

International Journal of Production Research is currently edited by Professor A. Dolgui

More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().