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Product design for leased products under remanufacturing

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  • Steeneck, Daniel W.
  • Sarin, Subhash C.

Abstract

Due to growing regulations, competition, and a changing corporate culture, original equipment manufacturers (OEMs) are now increasing their extended producer responsibility (EPR). In this paper, we explore how this trend of EPR affects product design when an OEM decides to lease their products and then remanufacture them at the end of a lease period. In this context, we investigate the level of durability to be built into the parts of a product. Our analysis reveals that, assuming a linear cost/durability tradeoff, there are discrete durability levels for each part to select from, and that, the optimal durability level for a part depends on: (1) the quantity of products remanufactured, (2) the profit margin of remanufactured products, and (3) the recovery rate of leased products. Also, we show how our analysis can be extended to: (1) accommodate various forms of nonlinear cost/durability trade-off functions, and (2) address cannibalization of new product leases by remanufactured products.

Suggested Citation

  • Steeneck, Daniel W. & Sarin, Subhash C., 2018. "Product design for leased products under remanufacturing," International Journal of Production Economics, Elsevier, vol. 202(C), pages 132-144.
    • Handle: RePEc:eee:proeco:v:202:y:2018:i:c:p:132-144
    DOI: 10.1016/j.ijpe.2018.04.025
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    References listed on IDEAS

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    1. Daniel W. Steeneck & Subhash C. Sarin, 2017. "Determining end-of-life policy for recoverable products," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5782-5800, October.
    2. Guo, Shanshan & Aydin, Goker & Souza, Gilvan C., 2014. "Dismantle or remanufacture?," European Journal of Operational Research, Elsevier, vol. 233(3), pages 580-583.
    3. Inderfurth, K. & de Kok, A. G. & Flapper, S. D. P., 2001. "Product recovery in stochastic remanufacturing systems with multiple reuse options," European Journal of Operational Research, Elsevier, vol. 133(1), pages 130-152, August.
    4. Laurens G. Debo & L. Beril Toktay & Luk N. Van Wassenhove, 2005. "Market Segmentation and Product Technology Selection for Remanufacturable Products," Management Science, INFORMS, vol. 51(8), pages 1193-1205, August.
    5. Pangburn, Michael S. & Stavrulaki, Euthemia, 2014. "Take back costs and product durability," European Journal of Operational Research, Elsevier, vol. 238(1), pages 175-184.
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    Citations

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    Cited by:

    1. Shuiye Niu & Honglong Zhuo & Kelei Xue, 2019. "DfRem-Driven Closed-Loop Supply Chain Decision-Making: A Systematic Framework for Modeling Research," Sustainability, MDPI, vol. 11(12), pages 1-19, June.
    2. Yufei Hu & Lianghua Chen & Yingying Chi & Bowen Song, 2022. "Manufacturer encroachment on a closed‐loop supply chain with design for remanufacturing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1941-1959, September.
    3. Zheng, Xiong & Govindan, Kannan & Deng, Qianzhou & Feng, Lipan, 2019. "Effects of design for the environment on firms’ production and remanufacturing strategies," International Journal of Production Economics, Elsevier, vol. 213(C), pages 217-228.
    4. Zheng, Yanyan & Zhao, Yingxue & Wang, Nengmin & Meng, Xiaoge & Yang, Honglin, 2022. "Financing decision for a remanufacturing supply chain with a capital constrained retailer: A study from the perspective of market uncertainty," International Journal of Production Economics, Elsevier, vol. 245(C).
    5. Haitao Chen & Qiang Xu & Zhaohui Dong & Hetian Zhao, 2023. "Recycling Versus Leasing in Closed-Loop Supply Chain: A Comparative Analysis Anchored on Consumer Ownership Perceptions," SAGE Open, , vol. 13(4), pages 21582440231, December.
    6. Qixiang Wang & Xiaobo Wang, 2022. "Does Product Eco-design Promote Remanufacturing: Application of a Stylized Game-theoretic Model," Sustainability, MDPI, vol. 15(1), pages 1-20, December.
    7. Weisheng Deng, 2019. "Does Remanufacturing Always Benefit the Manufacturer and Hurt the Supplier?," Sustainability, MDPI, vol. 11(6), pages 1-13, March.
    8. Liu, Zhi & Li, Kevin W. & Li, Bang-Yi & Huang, Jun & Tang, Juan, 2019. "Impact of product-design strategies on the operations of a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 75-91.

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