Remanufacturing Operations in Different Financial Ownership Structures with Consideration of the Upwards Supplier

Abstract

Under the increasing environmental pressure, remanufacturing has increasingly become a new mode of recycling economy and upgrading and transforming the equipment manufacturing industry. Some enterprises include remanufacturing businesses in the original production system by holding or controlling shares in other remanufacturing enterprises. This paper builds a two-echelon supply chain model composed of a supplier, a manufacturer, and a remanufacturer, considering the different ownership structures (i.e., shareholding and share-controlling) between them, in which the supplier sells non-remanufacturable parts to the manufacturer and the remanufacturer. At the same time, the optimal decisions of each firm are considered. The results show that for the manufacturer, a higher shareholding ratio means that it can obtain more profits. For the supplier, the impact of the shareholding ratio depends on the manufacturing cost. When the manufacturing cost is relatively low, the stock sharing relationship between the manufacturer and the remanufacturer will decrease the supplier’s profit. When the manufacturing cost is relatively high, it will depend on the shareholding ratio. In the case of shareholding between the manufacturer and the remanufacturer, a higher shareholding ratio will decrease the supplier’s profit. From the perspective of the supply chain, when the production cost is high enough, the supply chain’s profit decreases first and then increases with the shareholding ratio. Furthermore, the increase in the manufacturer’s shareholding in remanufacturing does not always improve the remanufacturing proportion of products.