Remanufacturing mode and strategic decision: a game-theoretic approach
Remanufacturing mode and strategic decision: a game-theoretic approach
This study considers a supply chain consisting of an original equipment manufacturer (OEM) and a contract manufacturer (CM). The OEM outsources the production of new products to the CM and cooperates with the CM again in remanufacturing. However, the cooperation in remanufacturing may be either through outsourcing or authorization. As the remanufacturer, the CM may choose among three remanufacturing strategies (i.e., not remanufacturing, partial remanufacturing, and full remanufacturing) based on the quality of the collected products. We examined the CM's optimal remanufacturing strategy decision for a given remanufacturing mode (i.e., outsourcing or authorization), the OEM's remanufacturing mode decision when the CM's remanufacturing strategy has been determined, and the environmental impact of the two remanufacturing modes. The results show that, depending on the profitability of new and remanufactured products, the CM will adopt different remanufacturing strategies in the two remanufacturing modes, and not remanufacturing may become an optimal choice for the CM in the authorization mode. For the OEM, both remanufacturing modes can give the OEM a higher profit when certain market conditions are reached, whereas the CM's profit in the outsourcing mode is always larger than that in the authorization mode. As such, outsourcing can become a win-win solution for the OEM and CM. Both remanufacturing modes can achieve the best possible environmental outcome when the full remanufacturing strategy is adopted. However, outsourcing remanufacturing is always more environmentally friendly than the authorization mode in the partial remanufacturing scenario.
Cost structure, Game theory, Remanufacturing mode, Remanufacturing strategy
Zhou, Qin
22cc3c1b-50f4-41e0-9c3e-8cdf183a022e
Meng, Chao
30df20a9-21f1-42c5-921f-99fd5b5629ec
Sheu, Jiuh-Biing
89b339c4-1855-4424-8b52-ed279c7030cc
Yuen, Kum Fai
5acba8bd-2837-4913-8ec8-5b9b98cb04b9
June 2023
Zhou, Qin
22cc3c1b-50f4-41e0-9c3e-8cdf183a022e
Meng, Chao
30df20a9-21f1-42c5-921f-99fd5b5629ec
Sheu, Jiuh-Biing
89b339c4-1855-4424-8b52-ed279c7030cc
Yuen, Kum Fai
5acba8bd-2837-4913-8ec8-5b9b98cb04b9
Zhou, Qin, Meng, Chao, Sheu, Jiuh-Biing and Yuen, Kum Fai
(2023)
Remanufacturing mode and strategic decision: a game-theoretic approach.
International Journal of Production Economics, 260 (6), [108841].
(doi:10.1016/j.ijpe.2023.108841).
Abstract
This study considers a supply chain consisting of an original equipment manufacturer (OEM) and a contract manufacturer (CM). The OEM outsources the production of new products to the CM and cooperates with the CM again in remanufacturing. However, the cooperation in remanufacturing may be either through outsourcing or authorization. As the remanufacturer, the CM may choose among three remanufacturing strategies (i.e., not remanufacturing, partial remanufacturing, and full remanufacturing) based on the quality of the collected products. We examined the CM's optimal remanufacturing strategy decision for a given remanufacturing mode (i.e., outsourcing or authorization), the OEM's remanufacturing mode decision when the CM's remanufacturing strategy has been determined, and the environmental impact of the two remanufacturing modes. The results show that, depending on the profitability of new and remanufactured products, the CM will adopt different remanufacturing strategies in the two remanufacturing modes, and not remanufacturing may become an optimal choice for the CM in the authorization mode. For the OEM, both remanufacturing modes can give the OEM a higher profit when certain market conditions are reached, whereas the CM's profit in the outsourcing mode is always larger than that in the authorization mode. As such, outsourcing can become a win-win solution for the OEM and CM. Both remanufacturing modes can achieve the best possible environmental outcome when the full remanufacturing strategy is adopted. However, outsourcing remanufacturing is always more environmentally friendly than the authorization mode in the partial remanufacturing scenario.
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Accepted/In Press date: 12 March 2023
e-pub ahead of print date: 20 March 2023
Published date: June 2023
Additional Information:
Funding Information:
The handling editor and anonymous reviewers are appreciated for their insightful criticism, which helped the authors make this paper better.The authors declare no conflict of interest in this research.
Publisher Copyright:
© 2023 Elsevier B.V.
Keywords:
Cost structure, Game theory, Remanufacturing mode, Remanufacturing strategy
Identifiers
Local EPrints ID: 475842
URI: http://eprints.soton.ac.uk/id/eprint/475842
ISSN: 0925-5273
PURE UUID: ac1c9fbe-1634-4881-aee1-b0a9a4d56be8
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Date deposited: 29 Mar 2023 16:44
Last modified: 17 Mar 2024 04:18
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Contributors
Author:
Qin Zhou
Author:
Chao Meng
Author:
Jiuh-Biing Sheu
Author:
Kum Fai Yuen
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