Pricing strategy in remanufacturing using a spatial model approach

ABSTRACT

One of the critical issues in remanufacturing strategy is determining the selling prices for the multiple differentiated versions of the new and remanufactured products. This study deals with such pricing decisions in closed-loop supply chains where the demand is assumed to be price- and reusability-dependent function with partially substitutable between different versions of the product. In light of the unique and practical demand function, the Salop spatial model is used to formulate the demand model where the consumer preference and the substitution effect are considered. The analytical and numerical results suggest that the prices of the new and remanufactured products increase in the similarity between multiple versions of the product. This study contributes to the literature by simultaneously considering the effects of pricing and reusability, yet the prior studies are neglecting such effects.

Graphical Abstract

KEYWORDS:

• Salop spatial model
• reusability
• remanufacturing
• pricing
• closed-loop supply chain

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from the corresponding author [Jen-Ming Chen] upon reasonable request. https://drive.google.com/drive/u/2/folders/1Ji3qrYNRkPHdGDjQt_Ebsy5_KrpFmK06

Additional information

Funding

This work was supported by the Ministry of Science and Technology, Taiwan [MOST107-2410-H-008-033-MY3].

Notes on contributors

Nguyen Thi My Hanh

Nguyen Thi My Hanh is currently a Ph.D. student in the Graduate Institute of Industrial Management at National Central University, Taiwan. Her research interests include supply chain management, smart manufacturing, and channel coordination.

Jen-Ming Chen

Jen-Ming Chen is a professor in the Institute of Industrial Management at the National Central University (Taiwan). He received a B.S. in Industrial Management Science from the National Cheng Kung University (Taiwan) in 1983, an M.S. in Industrial Engineering from the University of Arizona in 1988, and a Ph.D. in Industrial Engineering from the Pennsylvania State University in 1992. His research interests include channel coordination, pricing and revenue management, supply chain management, intelligent manufacturing, and predictive maintenance. He is an active member of several professional organizations, including Informs, DSI, and IIE. Dr. Chen is the recipient of the George B. Dantzig Dissertation Award from the Informs and the recipient of the IIE Doctoral Dissertation Award, both in 1994.