Impact of the cannibalization effect between new and remanufactured products on supply chain design and operations

Abstract

The cannibalization effect between new and remanufactured products impacts market demand and further influences supply chain design, which makes supply chain operations complex. This article studies the impact of cannibalization between new and remanufactured products on supply chain network design and operations by considering a joint pricing-location-inventory problem. A three-level supply chain network that consists of multi-distribution centers and retailers is considered. New and remanufactured products are supplied simultaneously. The problem is formulated as a nonlinear mixed-integer program and is then transformed into a conic quadratic mixed-integer program. An outer approximation-based solution approach is developed to solve the program. Extensive numerical experiments are conducted to explore the performance of the algorithm and the effects of market cannibalization on the supply chain network design and operations.

KEYWORDS:

• Cannibalization effect
• location problem
• price-dependent demands
• nonlinear mixed-integer programming

Acknowledgements

We would also like to thank the anonymous reviewers and the editors for their constructive suggestions.

Additional information

Funding

This research is partially supported by the National Natural Science Foundation of China under Grants 71371106 and 71332005.

Notes on contributors

Yanzi Zhang

Yanzi Zhang is a Ph.D. candidate in industrial engineering at Tsinghua University, China. Her research interests include closed-loop supply chain management, pricing problems, and reverse logistics. She earned her B.S. degree in logistics management from the School of Economics and Management at Beijing Jiaotong University in 2014.

Zhi-Hai Zhang

Zhi-Hai Zhang is an associate professor in the Department of Industrial Engineering at Tsinghua University, China. His current research interests focus on operational management, supply chain and logistics management, and production planning and scheduling. He has published numerous articles in many journals such as Transportation Science, European Journal of Operational Research, Omega, Computers & Operations Research, etc.