IDEAS home Printed from https://ideas.repec.org/a/wsi/apjorx/v33y2016i01ns0217595916500044.html
   My bibliography  Save this article

Optimal Remanufacturing and Pricing Strategies Under Name-Your-Own-Price Auctions and Stochastic Demand

Author

Listed:
  • Jianbin Li

    (School of Management, Huazhong University of Science and Technology, Wuhan 430074, P. R. China)

  • Qifei Wang

    (School of Management, Huazhong University of Science and Technology, Wuhan 430074, P. R. China)

  • Hong Yan

    (Department of Logistics and Maritime Studies, Faculty of Business, The Hong Kong Polytechnic University, Hung Hom, Hong Kong)

  • Stuart X. Zhu

    (Department of Operations, Faculty of Economics and Business, University of Groningen, Groningen, The Netherlands)

Abstract

In this paper, we study recycling, remanufacturing, and pricing strategies of a manufacturer in a closed-loop supply chain. Different from traditional list-price transaction, a name-your-own-price auction is introduced into the recycling process where consumers offer a bid for their own used items and the manufacturer decides whether to accept the bid. We first analyze the consumers’ behavior and find that their bids increase with the dealing cost. Next, we build a newsvendor framework to investigate the manufacturer’s optimal manufacturing with pricing strategies and find that the stocking factor influences the recycling quantity and manufacturing policy. Moreover, we find that a larger salvage value motivates the manufacturer to set a higher stocking factor and thus recycle more as well as manufacture new products. We further investigate the effect of the demand uncertain level and the dealing cost on the system.

Suggested Citation

  • Jianbin Li & Qifei Wang & Hong Yan & Stuart X. Zhu, 2016. "Optimal Remanufacturing and Pricing Strategies Under Name-Your-Own-Price Auctions and Stochastic Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 33(01), pages 1-22, February.
    • Handle: RePEc:wsi:apjorx:v:33:y:2016:i:01:n:s0217595916500044
    DOI: 10.1142/S0217595916500044
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217595916500044
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0217595916500044?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Awi Federgruen & Aliza Heching, 1999. "Combined Pricing and Inventory Control Under Uncertainty," Operations Research, INFORMS, vol. 47(3), pages 454-475, June.
    2. Ni-Na Yan & Bao-Wen Sun, 2012. "Optimal Stackelberg Strategies For Closed-Loop Supply Chain With Third-Party Reverse Logistics," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 29(05), pages 1-21.
    3. Jen-Ming Chen & Chia-I Chang, 2012. "The economics of hybrid manufacturing systems in a closed-loop supply chain," Netnomics, Springer, vol. 13(2), pages 79-91, July.
    4. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    5. Flapper, Simme Douwe & Gayon, Jean-Philippe & Lim, Lâm Laurent, 2014. "On the optimal control of manufacturing and remanufacturing activities with a single shared server," European Journal of Operational Research, Elsevier, vol. 234(1), pages 86-98.
    6. Nicholas C. Petruzzi & Maqbool Dada, 1999. "Pricing and the Newsvendor Problem: A Review with Extensions," Operations Research, INFORMS, vol. 47(2), pages 183-194, April.
    7. Christian Terwiesch & Sergei Savin & Il-Horn Hann, 2005. "Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application," Management Science, INFORMS, vol. 51(3), pages 339-351, March.
    8. Kaya, Onur, 2010. "Incentive and production decisions for remanufacturing operations," European Journal of Operational Research, Elsevier, vol. 201(2), pages 442-453, March.
    9. Sudheer Gupta & Richard Loulou, 1998. "Process Innovation, Product Differentiation, and Channel Structure: Strategic Incentives in a Duopoly," Marketing Science, INFORMS, vol. 17(4), pages 301-316.
    10. Joo, Mingyu & Mazumdar, Tridib & Raj, S.P., 2012. "Bidding Strategies and Consumer Savings in NYOP Auctions," Journal of Retailing, Elsevier, vol. 88(1), pages 180-188.
    11. Gilbert, Stephen M. & Cvsa, Viswanath, 2003. "Strategic commitment to price to stimulate downstream innovation in a supply chain," European Journal of Operational Research, Elsevier, vol. 150(3), pages 617-639, November.
    12. Scott Fay, 2004. "Partial-Repeat-Bidding in the Name-Your-Own-Price Channel," Marketing Science, INFORMS, vol. 23(3), pages 407-418, February.
    13. Min Ding & Jehoshua Eliashberg & Joel Huber & Ritesh Saini, 2005. "Emotional Bidders---An Analytical and Experimental Examination of Consumers' Behavior in a Priceline-Like Reverse Auction," Management Science, INFORMS, vol. 51(3), pages 352-364, March.
    14. Ali E. Abbas & Il-Horn Hann, 2010. "Measuring Risk Aversion in a Name-Your-Own-Price Channel," Decision Analysis, INFORMS, vol. 7(1), pages 123-136, March.
    15. J-M Chen & C-I Chang, 2012. "The economics of a closed-loop supply chain with remanufacturing," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(10), pages 1323-1335, October.
    16. Dmitry Shapiro, 2011. "Profitability of the Name-Your-Own-Price Channel in the Case of Risk-Averse Buyers," Marketing Science, INFORMS, vol. 30(2), pages 290-304, 03-04.
    17. Zhao, Yingxue & Choi, Tsan-Ming & Cheng, T.C.E. & Sethi, Suresh P. & Wang, Shouyang, 2014. "Buyback contracts with price-dependent demands: Effects of demand uncertainty," European Journal of Operational Research, Elsevier, vol. 239(3), pages 663-673.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hua Ke & Yong Wu & Hu Huang, 2018. "Competitive Pricing and Remanufacturing Problem in an Uncertain Closed-Loop Supply Chain with Risk-Sensitive Retailers," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-21, February.
    2. Xiaoxiao Luo & Minqiang Li & Nan Feng & Fuzan Chen, 2017. "Optimal Design on Customized Bundling Strategy of Information Goods for Customers with Two-Dimensional Heterogeneity," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(02), pages 1-32, April.
    3. Mao, Zhaofang & Liu, Wei & Feng, Bo, 2019. "Opaque distribution channels for service providers with asymmetric capacities: Posted-price mechanisms," International Journal of Production Economics, Elsevier, vol. 215(C), pages 112-120.
    4. Zhou, Yongyi & Zhang, Yulin & Wahab, M.I.M. & Goh, Mark, 2023. "Channel leadership and performance for a closed-loop supply chain considering competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 175(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Scott Fay & Robert Zeithammer, 2017. "Bidding for Bidders? How the Format for Soliciting Supplier Participation in NYOP Auctions Impacts Channel Profit," Management Science, INFORMS, vol. 63(12), pages 4324-4344, December.
    2. Chen, Yahong & Li, Jinlin & Huang, He & Ran, Lun & Hu, Yusheng, 2017. "Encouraging information sharing to boost the name-your-own-price auction," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 479(C), pages 108-117.
    3. Krämer, Florentin & Schmidt, Klaus M. & Spann, Martin & Stich, Lucas, 2017. "Delegating pricing power to customers: Pay What You Want or Name Your Own Price?," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 125-140.
    4. Ghosh, Debabrata & Gouda, Sirish & Shankar, Ravi & Swami, Sanjeev & Thomas, Vinu Cheruvil, 2018. "Strategic decision making under subscription-based contracts for remanufacturing," International Journal of Production Economics, Elsevier, vol. 200(C), pages 134-150.
    5. Wang, Qifei & Li, Jianbin & Yan, Hong & Zhu, Stuart X., 2016. "Optimal remanufacturing strategies in name-your-own-price auctions with limited capacity," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 113-129.
    6. Ali E. Abbas & Il-Horn Hann, 2010. "Measuring Risk Aversion in a Name-Your-Own-Price Channel," Decision Analysis, INFORMS, vol. 7(1), pages 123-136, March.
    7. Tong Shu & Qian Liu & Shou Chen & Shouyang Wang & Kin Keung Lai, 2018. "Pricing Decisions of CSR Closed-Loop Supply Chains with Carbon Emission Constraints," Sustainability, MDPI, vol. 10(12), pages 1-25, November.
    8. R. Canan Savaskan & Luk N. Van Wassenhove, 2006. "Reverse Channel Design: The Case of Competing Retailers," Management Science, INFORMS, vol. 52(1), pages 1-14, January.
    9. Zu-Jun, Ma & Zhang, Nian & Dai, Ying & Hu, Shu, 2016. "Managing channel profits of different cooperative models in closed-loop supply chains," Omega, Elsevier, vol. 59(PB), pages 251-262.
    10. He, Yuanjie, 2015. "Acquisition pricing and remanufacturing decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 163(C), pages 48-60.
    11. Tuo Wang & Esther Gal-Or & Rabikar Chatterjee, 2009. "The Name-Your-Own-Price Channel in the Travel Industry: An Analytical Exploration," Management Science, INFORMS, vol. 55(6), pages 968-979, June.
    12. Scott Fay & Juliano Laran, 2009. "Implications of Expected Changes in the Seller's Price in Name-Your-Own-Price Auctions," Management Science, INFORMS, vol. 55(11), pages 1783-1796, November.
    13. Martin Spann & Robert Zeithammer & Marco Bertini & Ernan Haruvy & Sandy D. Jap & Oded Koenigsberg & Vincent Mak & Peter Popkowski Leszczyc & Bernd Skiera & Manoj Thomas, 2018. "Beyond Posted Prices: the Past, Present, and Future of Participative Pricing Mechanisms," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 5(1), pages 121-136, March.
    14. He, Yuanjie, 2017. "Supply risk sharing in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 183(PA), pages 39-52.
    15. Shapiro, Dmitry & Zillante, Arthur, 2009. "Naming your own price mechanisms: Revenue gain or drain?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(2), pages 725-737, November.
    16. Yan, Wei & Xiong, Yu & Xiong, Zhongkai & Guo, Nian, 2015. "Bricks vs. clicks: Which is better for marketing remanufactured products?," European Journal of Operational Research, Elsevier, vol. 242(2), pages 434-444.
    17. Ziang Liu & Tatsushi Nishi, 2019. "Government Regulations on Closed-Loop Supply Chain with Evolutionarily Stable Strategy," Sustainability, MDPI, vol. 11(18), pages 1-29, September.
    18. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    19. Nosoohi, Iman, 2022. "Posted price and name-your-own-price in a product line design problem," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    20. Choi, Tsan-Ming & Li, Yongjian & Xu, Lei, 2013. "Channel leadership, performance and coordination in closed loop supply chains," International Journal of Production Economics, Elsevier, vol. 146(1), pages 371-380.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:apjorx:v:33:y:2016:i:01:n:s0217595916500044. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/apjor/apjor.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.