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Optimal Dynamic Pricing For Used Products In Remanufacturing Over An Infinite Horizon

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  • GENDAO LI

    (School of Management, Jilin University, No. 5988, Renmin Avenue, Changchun, Jilin Province, 130022, P. R. China)

  • BAOFENG SUN

    (College of Transportation, Jilin University, No. 5988, Renmin Avenue, Changchun, Jilin Province, 130022, P. R. China)

Abstract

The return of used products (cores) is the beginning of remanufacturing. Although an appropriate pricing policy can effectively manage the returns, a static pricing policy cannot match the returns and demands because of the high uncertainties in both sides, which in turn results in high inventory cost or lost-sale cost. In this paper, we apply a dynamic pricing policy commonly used in retail setting to the core acquisition management in remanufacturing and study the pricing problem for used products with the objective of minimizing average cost over an infinite horizon. We formulate the pricing problem as a continuous-time Markov decision process and characterize the structural properties of the optimal policy. We also conduct a numerical study to investigate the benefit of dynamic pricing.

Suggested Citation

  • Gendao Li & Baofeng Sun, 2014. "Optimal Dynamic Pricing For Used Products In Remanufacturing Over An Infinite Horizon," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 31(03), pages 1-21.
    • Handle: RePEc:wsi:apjorx:v:31:y:2014:i:03:n:s0217595914500122
    DOI: 10.1142/S0217595914500122
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    Cited by:

    1. Yu-Chung Tsao & Vu-Thuy Linh & Jye-Chyi Lu & Vincent Yu, 2018. "A supply chain network with product remanufacturing and carbon emission considerations: a two-phase design," Journal of Intelligent Manufacturing, Springer, vol. 29(3), pages 693-705, March.
    2. Chen, Daqiang & Ignatius, Joshua & Sun, Danzhi & Zhan, Shalei & Zhou, Chenyu & Marra, Marianna & Demirbag, Mehmet, 2019. "Reverse logistics pricing strategy for a green supply chain: A view of customers' environmental awareness," International Journal of Production Economics, Elsevier, vol. 217(C), pages 197-210.

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