Sustainable decisions on product upgrade confrontations with remanufacturing operations

Sun, Lin; Zhang, Lingjiang; Li, Youwei

Abstract

In recent decades, remanufacturing is perceived to be an environmentally friendly option due to the reduced consumption of materials, energy etc. It should be noted that whether the remanufacturing operations are undertaken by the original equipment manufacturers (OEMs) or outsourced to the remanufacturers, given the size and the growth of remanufactured products, many OEMs intend to fend off the potential cannibalization of new products sales through differentiating their quality levels from those of remanufactured ones by launching upgraded versions. To understand whether and how the product upgrading strategy impacts on optimal outcomes in the context of the remanufacturing operations undertaken by OEMs or third-party remanufacturers (TPRs), in this paper, we develop two models that highlight the OEM’s product upgrading strategy under the scenarios where (1) the OEM owns its remanufacturing operations in-house (Model O) or (2) remanufacturing operations are undertaken by a TPR (Model T). Among other results, we find that, from an economic performance perspective, it is more beneficial for the OEM to perform remanufacturing operations in-house; however, from an environmental sustainability perspective, such behavior is not always good for our environment. In particular, when the level of product upgrading is pronounced, the remanufacturing operations undertaken by the OEM are always detrimental to our environment, due to indulging in remanufacturing, as seen in Model O.

Citation

Sun, L., Zhang, L., & Li, Y. (2018). Sustainable decisions on product upgrade confrontations with remanufacturing operations. Sustainability, 10(11), Article 4090. https://doi.org/10.3390/su10114090

• Journal Article Type: Article
• Acceptance Date: Nov 5, 2018
• Online Publication Date: Nov 7, 2018
• Publication Date: 2018-11
• Deposit Date: Mar 19, 2019
• Publicly Available Date: Mar 20, 2019
• Journal: Sustainability (Switzerland)
• Electronic ISSN: 2071-1050
• Publisher: MDPI
• Peer Reviewed: Peer Reviewed
• Volume: 10
• Issue: 11
• Article Number: 4090
• DOI: https://doi.org/10.3390/su10114090
• Keywords: Sustainability; Environmental impacts; Product upgrading; Remanufacturing; Game theory
• Public URL: https://hull-repository.worktribe.com/output/1389470
• Publisher URL: https://www.mdpi.com/2071-1050/10/11/4090
• Contract Date: Mar 19, 2019