Joint optimisation of price, warranty and recovery planning in remanufacturing of used products under linear and non-linear demand, return and cost functions

Abstract

We investigate joint optimisation of remanufacturing, pricing and warranty decision-making for end-of-life products. A novel mathematical–statistical model is proposed where decisions involve pricing of returned used products (cores), degree of their remanufacturing, selling price and the warranty period for the final remanufactured products. The virtual age reliability improvement approach is chosen to model the upgrading of the cores to higher quality levels. We consider price- and warranty-dependent demand, price- and age-dependent return, and age-dependent remanufacturing cost in the model development. Both linear and non-linear forms of these functions are investigated. First, under some restrictive conditions of upgrade level and age distribution of received cores, special cases of the problem, which can be solved using a recently developed non-linear optimisation solver, are presented. We also implement a particle swarm optimisation algorithm for the solution of the original problem when all the restrictive assumptions are dropped. Finally, numerical experiments and sensitivity analysis are presented to address different aspects of the model and the solution approaches.