zbMATH — the first resource for mathematics

The effect of remanufacturing on procurement decisions for resellers in secondary markets. (English) Zbl 1071.90509
Summary: 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.

90B05 Inventory, storage, reservoirs
Full Text: DOI
[1] Bassok, Y.; Anupindi, R.; Akella, R., Single-period multiproduct inventory models with substitution, Operations research, 4, 632-642, (1999) · Zbl 0979.90005
[2] Debo, L., Toktay, B., Van Wassenhove, L.N., 2001. Market segmentation and production technology for remanufacturable products. INSEAD Working Paper
[3] Groenevelt, H., Majumder, P., 2000. Competition in remanufacturing. Working Paper, Simon School of Business, University of Rochester
[4] Guide, V.D., Production planning and control for remanufacturing: industry practice and research needs, Journal of operations management, 18, 467-483, (2000)
[5] Guide, V.D., Teunter, R.H., Van Wassenhove, L.N., 2001. Matching demand and supply to maximize profits from remanufacturing. INSEAD Working Paper
[6] Guide, V.D.; Van Wassenhove, L.N., Managing product returns for remanufacturing, Production and operations management, 10, 2, 145-155, (2001)
[7] Hsu, A.; Bassok, Y., Random yield and random demand in a production system with downward substitution, Operations research, 47, 2, 277-290, (1999) · Zbl 0979.90011
[8] Ignall, E.; Veinott, A., Optimality of myopic inventory policies for several substitute products, Management science, 15, 5, 284-304, (1969) · Zbl 0172.44101
[9] Khouja, M., The single-period newsvendor problem: literature review and suggestions for further research, Omega, international journal of management science, 27, 537-553, (1999)
[10] Kiesmüller, G., Minner, S., Kleber, R., 2000. Optimal control of a product recovery system with backlogging. Otto von Guericke University, Magdeburg, Working Paper No. 8 · Zbl 0989.90006
[11] Minner, S., Kleber, R., 2000. Optimal control of production and remanufacturing. Otto von Guericke University, Magdeburg, Working Reprint No. 32 · Zbl 1015.90001
[12] Moorthy, S.; Png, I.P.L., Sequence and cannibalization in new product introductions, Management science, 36, 289-298, (1992) · Zbl 0825.90636
[13] Netessine, S.; Dobson, G.; Shumsky, R., Flexible service capacity: optimal investment and the impact of demand correlation, Operations research, 50, 2, 375-388, (2002) · Zbl 1163.90343
[14] Pasternack, B.; Drezner, Z., Optimal inventory control for substitutable commodities with stochastic demand, Naval research logistics, 38, 221-240, (1991) · Zbl 0737.90019
[15] Savaskan, C., Bhattacharya, S., Van Wassenhove, L.N., 1999. Channel choice and coordination in a remanufacturing environment. INSEAD Working Paper
[16] Silver, E.; Pyke, D.; Peterson, R., Inventory management and production planning and scheduling, (1998), John Wiley & Sons New York
[17] Smith, S.; Agrawal, N., Management of multi-retail inventory systems with demand substitution, Operations research, 48, 1, 50-64, (2000) · Zbl 1106.90306
[18] Thierry, M.; Salomon, M.; Van Nunen, J.; Van Wassenhove, L.N., Strategic issues in product recovery management, California management review, 37, 2, 114-135, (1995)
[19] Van der Laan, E.; Solomon, M.; Van Wassenhove, L.N., Inventory control in hybrid systems with remanufacturing, Management science, 45, 5, 733-747, (1999) · Zbl 1231.90066
[20] Van Ryzin, G.; Mahajan, S., On the relationship between inventory costs and variety benefits in retail assortments, Management science, 45, 11, 1496-1509, (1999) · Zbl 0953.90002
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.