Abstract
New generations of high-technology products are frequently launched before the previous model is sold out. Customers have an incentive to end the use of their old product and purchase a new one with the latest technological innovations. The unsold old models become less attractive, while the supply of remanufactured products from end-of-use products is uncertain in time, quantity, and quality. Other than adjusting the price, upgrading the returning unsold new products may be a source of remedy. This study provides profit maximization models associated with customer choice demand functions based on manufacturer, retailer, and joint supply chain scenarios. Two acquisition strategies are compared: acquire end-of-use products only and collect both end-of-use products and unsold old-style new products. The results reveal that returning the optimal quantity of overstocked new products brings about a greater benefit in all scenarios. Compared to the remanufacturer, the retailer is the optimal undertaker for collecting used products. In addition to this, slow technological development of the new-generation model causes a decrease in profit for the manufacturer. The optimal quantity of new products to be bought back decreases, because both the manufacturer and the retailer prefer to promote unsold outmoded products rather than upgrade the used products.
Highlights
With the development of technology, customers are becoming more and more dependent on electronic products
We reviewed papers regarding price decisions and launch strategies for short-lifecycle products, key challenges including demand-supply balance and channel design in reverse supply chain, and remanufacturing issues, especially for high-technology products
Some studies were about pricing decisions for new products across generations, they did not propose remanufactured products as part of the model
Summary
With the development of technology, customers are becoming more and more dependent on electronic products. The flood of electronic products brings about a prominent e-waste problem. Governments have introduced production recycling legislation, and manufacturers have developed production recovery programs to seek business opportunities from remanufactured products. Customers benefit from the use of good quality products at a lower price. In the last few decades, researchers have defined “remanufacturing” in different ways. Johnson and McCarthy define “remanufacturing” as a rebuilding process from the original manufactured product to a combination of reused, repaired, and new parts [1].
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