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Sustainable decisions on product upgrade confrontations with remanufacturing operations

Sun, Lin; Zhang, Lingjiang; Li, Youwei

Authors

Lin Sun

Lingjiang Zhang



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.

Journal Article Type Article
Publication Date 2018-11
Journal Sustainability (Switzerland)
Electronic ISSN 2071-1050
Publisher MDPI
Peer Reviewed Peer Reviewed
Volume 10
Issue 11
Article Number 4090
APA6 Citation Sun, L., Zhang, L., & Li, Y. (2018). Sustainable decisions on product upgrade confrontations with remanufacturing operations. Sustainability, 10(11), https://doi.org/10.3390/su10114090
DOI https://doi.org/10.3390/su10114090
Keywords Sustainability; Environmental impacts; Product upgrading; Remanufacturing; Game theory
Publisher URL https://www.mdpi.com/2071-1050/10/11/4090

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Copyright Statement
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).





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