Market Positioning of Remanufactured Products With Optimal Planning for Part Upgrades

Abstract

In a market with rapid changes in technology and customer preferences, technological obsolescence of endoflife products poses a significant challenge to product recovery. Remanufacturing with optimal part upgrades can be a promising solution for overcoming the obsolescence. This paper proposes a model for positioning a remanufactured product. By considering original product design, target market (i.e., customer preferences and competing products), and recovery economics, the model helps to find optimal specifications and the selling price of a remanufactured product at which maximum remanufacturing profit is expected. Two versions of the model are presented under different assumptions on product takeback. The first model assumes that the remanufacturer passively accepts all returns without paying any financial incentives. The second model assumes that the remanufacturer buys back endoflife products so as to control the quality and quantity of returns. The two models are illustrated with the example of a desktop computer.