Publication Type

Journal Article

Publication Date

6-2005

Abstract

The role of remanufacturing as a competitive tool for firms has been reflected in a number of studies to show that remanufacturing can reduce the unit cost of production by reusing components. However, the fact that remanufacturing can be used as a strategic tool for serving secondary markets as well has not been acknowledged in the literature. In this paper, we study the use of remanufacturing as a tool to serve secondary markets. Specifically, we model the case of a reseller who procures used products based on an older generation of technology from an advanced market and then uses one of two options: (a) she can either resell a small fraction of these used products in a developing market where the technology is acceptable, or (b) she can invest in the remanufacturing of these products and then sell them in the developing market at a higher price. The main result of the paper is that using remanufacturing to serve secondary markets reduces the number of units procured from the advanced market for the reseller. In addition, we show based on certain cost structures that the reseller is always better off if she uses remanufacturing to a certain extent. (C) 2004 Elsevier B.V. All rights reserved.

Keywords

Inventory/production, Stochastic, Multiproduct, Substitution, Newsvendor problem, Product acquisition management, Remanufacturing

Discipline

Business Law, Public Responsibility, and Ethics | Entrepreneurial and Small Business Operations

Research Areas

Operations Management

Publication

European Journal of Operational Research

Volume

163

Issue

3

First Page

688

Last Page

705

ISSN

0377-2217

Identifier

10.1016/j.ejor.2004.01.013

Publisher

Elsevier

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

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