Does the remanufactured product deserve the same warranty as the new one in a closed-loop supply chain?

Abstract

We use a game-theoretic model to analyze the manufacturer's optimal warranty policy in a closed-loop supply chain. The new product is always associated with a premium warranty. The manufacturer decides on whether to provide the remanufactured product with the same premium warranty. The analytical results show that the optimal warranty policy depends heavily on the cost structure. However, the effect of the warranty cost is non-monotone. Interestingly, a higher cost of the premium warranty might induce the manufacturer to adopt the premium warranty policy. A mandatory same warranty regulation is all-around detrimental under certain conditions.