Pricing and production planning for reverse supply chain: a review

Abstract

Recently, much attention has been devoted to research in reverse supply chain (RSC) and remanufacturing. This has been motivated both by academic interest and by the significant impact that the RSC activities, including remanufacturing, have on a nation’s economy. In 1996, remanufacturing alone accounted for 0.4% of the US economy, as a $53 billion industry. In this paper, we provide background information on RSC and a brief exposure on the breadth of RSC literature, focused on remanufacturing. Two research streams, namely, pricing of new and remanufactured products and production planning and control in the presence of remanufacturing, are reviewed in some depth. Our review has unveiled a significant gap in the literature, namely that the pricing models till date do not typically consider the per-unit cost of remanufacturing to be a function of the number of cores acquired. This is an important consideration since the pricing of remanufactured products is dependent on the production cost. As the optimal production quantity depends on product demand, which, in turn, relies on the price of a remanufactured product, it is important to integrate production planning and pricing models for RSC.

Keywords:

• reverse supply chain
• remanufacturing
• market segmentation
• revenue management
• production planning
• mathematical modeling