Optimizing Design for Repairability: A Game Theoretic Approach for Incorporating Market Analysis

Abstract

This article investigates the design decision facing original equipment manufacturers (OEMs) in determining the optimal degree of repairability by considering market dynamics. The article develops a game-theoretic model to optimize the degree of product repairability for smartphones in a market in which an OEM and a coalition of independent service providers compete in offering repair services. A survey is conducted to estimate the consumer-related parameters of the game theory model by considering factors such as repair cost, prior repair experience of customers, and the quality of repair services offered by the OEM and independent repair service providers. The findings reveal that regardless of the repairability level, the OEM's repair profits are maximized when a significant disparity in the quality of repair services between the OEM and their competitors exists. On the other hand, independent repair service providers' profits are maximized when there is a low disparity in the quality of repair services. Also, the results show why the adoption of a fully repairable device is not the optimal strategy adopted by OEMs. Instead, a sufficiently large degree of repairability can be the strategic choice, as it maximizes the total OEM's profits derived from both the sale of future products and the provision of repair services for previously sold devices. At the same time, this strategy can encourage repair practices among consumers toward a more sustainable society.