Abstract
Remanufacturing is one of the recovery process that has become significant among many attempts to mitigate the landfill exhaustion, especially from mountain of wastes that come from short life-cycle products disposal. However, remanufactured product are often perceived to have lower quality compared to the new one. There are misconception about remanufactured product and lack of knowledge about its characteristics. On the other hand, several studies show that price and product quality have positive relationship. This paper investigates the effect of product’s perceived quality on the pricing decision, to maximize the profit of the retailer and the manufacturer. We develop pricing decision model for new and remanufactured short life-cycle product in a closed-loop supply chain consists of a manufacturer and a retailer, where the manufacturer is a Stackleberg leader. We find that lower product’s perceived quality would decrease the retail and wholesale prices of new and remanufactured products, but does not affect the new product’s sales volume significantly. Also, the speed of change of demand influences the optimum total profit.
Highlights
Total demand volumes during the selling horizon can be determined by integrating the demand functions with respect to time. ?? = ∫? 1+??−??? ?? + ∫??? ??(?−?)+? ? ? ? ?? = ln ? ? ? (???)??????? + ?? ln ???(????)??? ? (3) ?? = ∫???? 1+h?−??(?−?1) ? ?? + ∫ ? ? ?? ??(?−?3)+? ?? = ? ln ?(???)?????(?????)? + ?? ln ??? (????)??? ? ? (4) We introduce a product quality factor (?), and “remanufactured product’s quality coefficient” (?) to the pricing model to study its impact to the overall pricing decision
The product quality factor and remanufactured product’s quality coefficient will be varied to study their effects on the pricing decision
The decision variables are ??, ?? and ???, ??? which represent the retail price of new product, retail price of remanufactured product, wholesale price of new product, and wholesale price of remanufactured product 3.1
Summary
Remanufactured product are often perceived to have lower quality compared to the new one. This paper investigates the effect of product’s perceived quality on the pricing decision, to maximize the profit of the retailer and the manufacturer. We develop pricing decision model for new and remanufactured short life-cycle product in a closed-loop supply chain consists of a manufacturer and a retailer, where the manufacturer is a Stackleberg leader.
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