Managing New and Remanufactured Products

By Geraldo Ferrer, Jayashankar M. Swaminathan. Management Sciences, 2006

816 citations recorded by the source corpus.

We study a firm that makes new products in the first period and uses returned cores to offer remanufactured products, along with new products, in future periods. We introduce the monopoly environment in two-period and multiperiod scenarios to identify thresholds in remanufacturing operations. Next, we focus our attention on the duopoly environment where an independent operator (IO) may intercept cores of products made by the original equipment manufacturer (OEM) to sell remanufactured products in future periods. We characterize the production quantities associated with self-selection and explore the effect of various parameters in the Nash equilibrium. Among other results, we find that if remanufacturing is very profitable, the original-equipment manufacturer may forgo some of the first-period margin by lowering the price and selling additional units to increase the number of cores available for remanufacturing in future periods. Further, as the threat of competition increases, the OEM is more likely to completely utilize all available cores, offering the remanufactured products at a lower price.

Subfields: Management Information Systems, Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/b3ec0dc4832e50536bb93745e0e85d370e7ebb06

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Citations in the corpus

Impact of Take‐Back Regulation on the Remanufacturing Industry (2017, methodology): “Consistent with the literature, we also assume collected cores can be reman-ufactured once (Debo et al. 2005, Ferguson and Toktay 2006, Ferrer and Swaminathan 2006, Galbreth et al. 2013).”
Optimal pricing strategy under trade-in program in the presence of strategic consumers (2019, neutral): “Ferrer and Swaminathan [16], Heese et al. [20], and Shi et al. [40] examine the effect of remanufacturing the take-back product under monopoly and duopoly competition.”
Selling with Money‐Back Guarantees: The Impact on Prices, Quantities, and Retail Profitability (2013, background): “Ferrer and Swaminathan (2006) model a manufacturer producing and selling both new and remanufactured products in a multi-period setting.”
Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations (2020, background): “Closely related to our study, a set of papers in the literature of remanufacturing study the impact of competition between the original equipment manufacturer (OEM) and independent remanufacturers (Ferguson and Toktay 2006, Ferrer and Swaminathan 2006, Majumder and Groenevelt 2001).”
On the Competition between Two Modes of Product Recovery: Remanufacturing and Refurbishing (2019, background): “Majumder and Groen-evelt (2001) and Ferrer and Swaminathan (2006) study two-or multi-period models where an OEM’s production decision in an earlier period affects the number of product returns in a future period, which in turn constrains the remanufacturing activities by either the OEM itself or an…”
The Effect of Competition on Recovery Strategies (2006, background): “Groenevelt and Majumder (2001a) and Ferrer and Swaminathan (2005) assume that new and remanufac-tured products offered by the OEM are indistinguishable, but that the entrant’s remanufactured product is valued less by consumers.”
Competitive Quality Choice and Remanufacturing (2014, background): “…also sells the new product (e.g., Esen-duran et al. 2010, Ferrer and Swaminathan 2010), an IR competing with an OEM (e.g., Esenduran et al. 2012, Ferrer and Swaminathan 2006, Majumder and Groenevelt 2001), or an OEM who faces competition from another ﬁrm (e.g., Atasu et al. 2008, Heese et al.…”
Product Reuse Economics in Closed‐Loop Supply Chain Research (2008, background): “For instance, Geyer et al. (2007), while still assuming perfect substitution, no longer focus on local cost minimization, as much of the IE/OR stream does. They show it is not sufficient that remanufacturing is cheaper than new product manufacturing for a CLSC to be profitable. The latter requires c”
Optimal Price and Quantity of Refurbished Products (2006, background): “Ferrer and Swaminathan (2006) extend the previous work by developing a multi-period model to ﬁnd the Nash equilibrium for the duopoly case.”
Environmentally conscious manufacturing and product recovery (ECMPRO): A review of the state of the art. (2010, background): “Ferrer and Swaminathan (2006) extend Majumder and Groenevelt's (2001) study to a multi period setting where the independent operator competes with the OEM in the second and subsequent periods.”