How Does Licensing Remanufacturing Affect the Supply Chain Considering Customer Environmental Awareness?

How Does Retailer-Oriented Remanufacturing Affect the OEM’s Quality Choice?

We consider that a supply chain consists of an original equipment manufacturer (OEM) and a retailer. We analyze how the retailer’s remanufacturing decision affects the decision of the new products’ qualities for the OEM. We use a game theory approach to investigate the interactions between the OEM and the retailer with or without remanufacturing operation. We find the retailer’s motivation to develop the remanufacturing industry depends on the profitability of remanufactured products and the OEM’s deterring strategy. When the remanufacturing operation profit margin is low, the retailer voluntarily gives up remanufacturing; when this profit margin is moderate, the OEM induces the retailer to give up remanufacturing by improving the quality of the new product; when this profit margin is sufficiently high, the OEM cannot prevent the retailer from developing remanufacturing. The retailer developing remanufacturing as well as their threat of developing decrease the OEM’s profit because the OEM improves the quality of the new products to induce the retailer to give up remanufacturing, at the expense of its own profit. We explicitly characterize the process of the OEM from preventing to accepting the retailer developing the remanufacturing industry, as well as the changes in supply-chain members’ operating decisions and profits in the process. Finally, using MATLAB numerical analysis, we also found that the retailer’s development of the remanufacturing industry always benefits the whole supply chain, consumer surplus, and social welfare. Furthermore, the retailer’s development of the remanufacturing industry is not always good for the environment. This development is only good for the environment when the new products’ environmental impacts in the EOL stage are larger than the total environmental impacts of the remanufactured products in every stage of their life cycle.

Remanufacturing Strategy under Cap-and-Trade Regulation in the Presence of Assimilation Effect

In this paper, we consider the choice of remanufacturing strategy of a monopolist original equipment manufacturer under the cap-and-trade regulation in the presence of the assimilation effect. We model the manufacturer’s optimal decision-makings and associated profits under three different remanufacturing strategies. Our results indicate that the assimilation effect reduces the manufacturer’s motivation to become engaged in remanufacturing. Specifically, there exists a threshold for the intensity of the assimilation effect for the manufacturer to enter remanufacturing. First, when the assimilation effect is below the threshold, the manufacturer should choose to remanufacture. Otherwise, the manufacturer should only produce new products. Second, the value of the threshold for the assimilation effect is further determined by the remanufacturing’s emission advantage and the carbon trading price. In addition, when the intensity of the assimilation effect is high enough, the carbon trading price and carbon emission advantage no longer impacts the remanufacturing strategy. Lastly, our numerical examples reveal that ignoring the assimilation effect can lead to up to 56.2% loss of potential profit for the manufacturer.

Remanufacturing Policies Options for a Closed-Loop Supply Chain Network

Due to the need for resource utilization and environmental protection, remanufacturing is used as an effective means to achieve a circular economy. To focus on the production and sales of new products, manufacturers outsource the remanufacturing of used products to remanufacturers. Aiming at helping manufacturers to choose between self-remanufacturing and outsourcing remanufacturing policies, a closed-loop supply chain network equilibrium model considering the remanufacturing policy options is established. The equilibrium decision-making is obtained by using the variational inequality method. Furthermore, the criteria for manufacturers to choose between the two remanufacturing policies based on different factors such as recovery rates of the used products, remanufacturing costs, and environmental impact parameters, are given. Numerical examples show the following results: (1) When compared with self-remanufacturing policy, outsourcing remanufacturing policy can save resources, increase the sales of products, and have a smaller environmental impact. (2) When the recycling rate of used products is low, choosing an outsourcing remanufacturing policy can increase the sales of products. When the recycling rate is high, choosing a self-remanufacturing policy can get more profits. (3) When the costs of a self-remanufacturing policy and an outsource-remanufacturing policy are quite different, choosing the outsourcing remanufacturing policy can save resources and protect the environment.

Economic and Environmental Implications of Quality Choice under Remanufacturing Outsourcing

Although many studies have recently investigated how the product quality impacts on economic and environment performance under remanufacturing, all of them assume that remanufacturing operations are undertaken by the original equipment manufacturers (OEMs) or independent remanufacturers (IRs). However, many OEMs such as Lexmark, Canon, and Epson filed lawsuits with those IRs without licensing, but outsourced the remanufacturing operations to several contracted remanufacturers (CRs). We therefore extend the prior research to investigate the economic and environmental implications of OEMs’ strategic desired quality level choices under remanufacturing outsourcing. That is, we develop two models corresponding to two scenarios where OEMs (1) undertake remanufacturing in-house or (2) outsource it to a CR. Our results show that, to create a less intense cannibalization problem for new products sales, OEMs would be likely to choose a lower product quality when outsourcing remanufacturing to a CR. More importantly, from the economic perspective, we find that outsourcing remanufacturing to a CR hurts the OEM and the industry. However, from the environmental angle, our results reveal that there is a ratio threshold for environmental impact for different life cycle phases, above which remanufacturing in-house is definitely beneficial for OEM in economics and environment, but for the rest, outsourcing is equally or more environmental-friendly, despite cutting down the profit.

Sustainability in Supply Chains with Behavioral Concerns

Environmental sustainability has received considerable attention in industry and academia. Many firms have begun to adopt sustainability practices, such as investing in cleaner technology and using organic or recyclable materials, to enhance sustainability in supply chains. Such sustainability practices affect corporate social responsibility and business performance. On the other hand, when consumers and supply chain managers make decisions, they may be constrained by behavioral concerns. Behavioral concerns can significantly influence optimization in supply chains. Thus, it is critical to consider the impacts of behavioral concerns on sustainability in supply chains. In this paper, we concisely examine studies in sustainability issues in supply chains with behavioral concerns and introduce the papers featured in this Special Issue.