An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

Zhou, Qin; Yuen, Kum Fai

doi:10.1111/itor.12915

Cited by 24 publications

(22 citation statements)

References 46 publications

(73 reference statements)

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“…Zhou, et al [13] investigated an OEM's remanufacturing authorization decision when competition exists in the secondary market. Zhou and Yuen [19] examined an OEM's remanufacturing partner selection over two remanufacturing modes: authorization and outsourcing, and identified OEM's and IR's preference over these two modes. Jin, et al [41] considered dealer authorization mode where an OEM can turn an IR into an authorized seller that sells both new and remanufactured products and found that remanufacturing authorization between an OEM and an IR depends on the improvement of customers' willingness to pay for the remanufactured products because of the authorization cooperation.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Zhou

Yuen

Meng

et al. 2024

IEEE Trans. Eng. Manage.

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This research investigates the impact of intercompetitor licensing between an original equipment manufacturer (OEM) and an independent remanufacturer (IR) on (1) market competition between new and remanufactured products, (2) the IR's remanufacturing strategy, and (3) the IR's optimal quality choice for remanufactured products. In the considered supply chain, the OEM sells new products, and the IR collects used products and then sells remanufactured products to compete with the OEM. To produce remanufactured products, the IR can acquire remanufacturing technology either by paying a licensing fee to the OEM or self-developing it in-house by incurring a fixed research and development cost. We develop game-theoretic models to determine the optimal supply chain decisions concerning the royalty licensing fee, IR's remanufacturing strategy and production quality, and product sale prices.We find that a licensing contract will always induce the OEM and the IR to increase their sales price for new and remanufactured products. However, the OEM will always increase the sales price for new products to a larger degree than that of the IR. This can alleviate price competition between new and remanufactured products and make remanufactured products more competitive in the market. Under licensing cooperation, the IR will always remanufacture used products to a higher quality level which will intensify quality competition. No matter whether the royalty fee is exogenously or endogenously determined by the OEM, there exists a wide range of parameter regions such that a licensing contract will produce a win-win solution for the OEM and the IR. A licensing cooperation may be reached even when the unit royalty fee is at a relatively low level and the total royalty fee is higher than the selfdevelopment option.Managerial relevance statement: From a practical perspective, this study proposes how the OEM, and the IR should make licensing cooperation decision which aims to achieve a win-win solution. It also reveals that a royalty licensing contract can be mutually acceptable between the OEM and the IR in a wide range of parameter regions. This result is important for managers who want to engage in the 2 remanufacturing business. For the OEM, the result shows that licensing its remanufacturing technology at a low royalty fee may still be beneficial. For the IR, the result shows that seeking technology licensing may be more profitable even when the total paid royalty fee is higher than the cost of self-developing the technology. Strategic implications of royalty licensing on market competition, remanufacturing production strategy, and remanufacturing quality strategy should be carefully considered before making strategic decisions on remanufacturing and licensing cooperation.

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Section: Literature Reviewmentioning

confidence: 99%

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Zhou

Yuen

Meng

et al. 2024

IEEE Trans. Eng. Manage.

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“…Remanufacturing engineering is designed to repair the used products in such a way that the qualities of the remanufactured products can meet or exceed those of new products. Recent studies have shown that product remanufacturing can increase the demand for remanufactured products, affect the production quantities of new products, and further enable the manufacturer and the whole supply chain to obtain better production methods from the manufacturer recycling model [ 5 , 6 , 7 , 17 ]. The main processing method for remanufacturing products is called authorized remanufacturing, in which the original equipment manufacturer (OEM) is only responsible for selling new products; after charging third party remanufacturers (3PR) an authorization fee, the recycling, remanufacturing, and sale of the remanufactured products are authorized to 3PR.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In the actual production process, the method to obtain a license for remanufacturing has become the most significant issue for remanufacturers. In foreign countries, the ink cartridge remanufacturers of Canon and Epson faced the risk of being litigated by Lexmark for remanufacturing without its permission [ 17 ]. To study these issues in great depth, this paper focuses on the equilibrium of the CLSC network considering the OEM’s in-house remanufacturing and authorized remanufacturing strategy choices.…”

Section: Introductionmentioning

confidence: 99%

Remanufacturing Strategy Choice of a Closed-Loop Supply Chain Network Considering Carbon Emission Trading, Green Innovation, and Green Consumers

Zhou

Lin

Fan

et al. 2022

IJERPH

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Due to increasingly serious environmental pollution problems and governments’ strengthening of environmental impact supervision, manufacturing companies are seeking green production methods, implementing carbon trading systems, and promoting the trend towards green remanufacturing. Thus, this paper introduces green factors to the existing closed-loop supply chain network models and studies the impact of carbon trading, green innovation efforts, and green consumers on the choice between two remanufacturing strategies: an in-house remanufacturing strategy and an authorized remanufacturing strategy. The results concerning the choice of the remanufacturing strategy are as follows: from the perspective of obtaining more profits, when the carbon trading price is low, the companies choose the authorized remanufacturing strategy; when the carbon trading price is high, the companies choose to remanufacture by themselves. For all the green innovation efforts and the proportions of green consumers, when the recovery rate of the used product is low, the companies choose to remanufacture by themselves; when the recovery rate of the used product is high, the companies choose the authorized remanufacturing strategy.

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“…(2021) find that when parallel importation occurs, the manufacturer may have the motivation to license the technology and reduce the unit licensing fee. Zhou and Yuen (2021) investigate that the optimal remanufacturing mode (i.e., authorization and outsourcing) should be taken by an original equipment manufacturer. Yang et al.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Li et al (2021) find that when parallel importation occurs, the manufacturer may have the motivation to license the technology and reduce the unit licensing fee. Zhou and Yuen (2021) investigate that the optimal remanufacturing mode (i.e., authorization and outsourcing) should be taken by an original equipment manufacturer. Yang et al (2019) investigate whether and how a patent-holding supplier should license its technology patent to a potential rival when both suppliers face the supply disruptions.…”

Section: Literature Reviewmentioning

confidence: 99%

Innovation information sharing between two competitive supply chains

Xiao-min

Huang

et al. 2021

Int Trans Operational Res

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We study the innovation information sharing problem between two competing supply chains with one supplier and one manufacturer each. The manufacturer in each chain has private information about its product innovation degree and may choose to share such information with the competitor (horizontal information sharing), its supplier (vertical information sharing), or both (full transparency). We find that irrespective of the status of horizontal information sharing, vertical sharing always hurts the manufacturer, and sharing information horizontally is a dominating strategy for each manufacturer when the competition intensity is small. Furthermore, when competition intensity is not extremely large, full transparency can be realized through some transfer from the suppliers to the manufacturers, achieving a Pareto improvement for all parties, because the vertical and horizontal sharing are complementary to increase the supplier's benefit. Otherwise, neither horizontal nor vertical information sharing will occur.

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An investigation of original equipment manufacturer's optimal remanufacturing mode and engagement strategy

Cited by 24 publications

References 46 publications

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Impact of Intercompetitor Licensing on Remanufacturing Market Competition and Cooperation

Remanufacturing Strategy Choice of a Closed-Loop Supply Chain Network Considering Carbon Emission Trading, Green Innovation, and Green Consumers

Innovation information sharing between two competitive supply chains

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