The purpose of this paper is to introduce the reader to the field of closed-loop supply chains with a strong business perspective, i.e., we focus on profitable value recovery from returned products. It recounts the evolution of research in this growing area over the past 15 years, during which it developed from a narrow, technically focused niche area to a fully recognized subfield of supply chain management. We use five phases to paint an encompassing view of this evolutionary process for the reader to understand past achievements and potential future operations research opportunities.

Remanufacturing represents a higher form of reuse by focusing on value‐added recovery, rather than materials recovery (i.e., recycling). Remanufacturing systems are widespread in the United States and are profitable. However, the management of production planning and control activities can differ greatly from management activities in traditional manufacturing. We report on managerial remanufacturing practices via a survey of production planning and control activities at remanufacturing firms in the United States. Production planning and control activities are more complex for remanufacturing firms due to uncertainties from stochastic product returns, imbalances in return and demand rates, and the unknown condition of returned products. We identify and discuss seven complicating characteristics that require significant changes in production planning and control activities. We also describe the research opportunities that exist for each of the complicating characteristics.

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Firms are often encouraged to offer environmentally friendly products as a demonstration of corporate citizenship. However, this may prove to be an unrealistic expectation since a rational firm will only engage in profitable ventures; those that increase shareholder wealth. We develop a framework for analyzing the profitability of reuse activities and show how the management of product returns influences operational requirements. We show that the acquisition of used products may be used as the control lever for the management and profitability of reuse activities. These activities, termed product acquisition management, affect several important business decisions. First, if a firm is to pursue reuse activities, these reuse activities must be value‐creating. Second, if a firm is to compete by offering remanufactured products, then we show how product returns management influences the overall profitability of such activities via a trial and error EVA approach. Third, we show how operational issues are strongly affected by the approach used to manage product returns. There is a need for future research specifying the mathematical relationship between acquisition price and the nominal quality of the returned product.

T his study empirically investigates consumer perceptions of remanufactured consumer products in closed-loop supply chains. A multi-study approach led to increasing levels of measure refinement and facilitated examination of various assumptions researchers have made about the consumer market for remanufactured products. Based in part on the measure building studies, an experimental study examined remanufactured product perceptions from a national panel of consumers. The consumers responded to remanufactured product descriptions that manipulated price discount and brand equity. The results indicate that discounting had a consistently positive, linear effect on remanufactured product attractiveness. Curiously, the brand equity manipulation proved less important to consumers than specific remanufactured product quality perceptions. The results also show that green consumers and consumers who consider remanufactured products green typically found remanufactured products significantly more attractive. Finally, the findings introduce the concept of negative attribute perceptions, such as disgust, that had a significantly detrimental effect on remanufactured product attractiveness.

The potential for cannibalization of new product sales by remanufactured versions of the same product is a central issue in the continuing development of closed-loop supply chains. Practitioners have no fact-based information to guide practice at firms and academics have no studies available to use as the basis for assumptions in models. We address the cannibalization issue by using auctions to determine consumers' willingness to pay (WTP) for both new and remanufactured products. The auctions also allow us to better understand the potential impact of offering new and remanufactured products at the same time, which provides us insights into the potential for new product cannibalization. Our results indicate that, for the consumer and commercial products auctioned, there is a clear difference in WTP) for new and remanufactured goods. For the consumer product, there is scant overlap in bidders between the new and remanufactured products, leading us to conclude that the risk of cannibalization in this case is minimal. For the commercial product, there is evidence of overlap in bidding behavior, exposing the potential for cannibalization.

The profitability of remanufacturing depends on the quantity and quality of product returns and on the demand for remanufactured products. The quantity and quality of product returns can be influenced by varying quality-dependent acquisition prices, i.e., by using product acquisition management. Demand can be influenced by varying the selling price. We develop a simple framework for determining the optimal prices and the corresponding profitability. We motivate and illustrate our framework using an application from the cellular telephone industry.Remanufacturing, Product Acquisition, Econometric Models