Buying used products for remanufacturing: negotiating or posted pricing

Abstract

Product reclamation is a critical process in remanufacturing. It is generally assumed in the literature that customers simply want to get rid of their used products without expecting any compensation for them. Some authors have only recently started looking into firms that offer a posted (fixed) price for them. Following recent reports suggesting that customers are increasingly open to bargaining, we compare using a posted price and bargaining to obtain used products. In our analysis, we consider an original manufacturer acting as a monopolist as well as a manufacturer and an independent remanufacturer acting in a duopoly. We analytically show that bargaining is always beneficial to the monopoly manufacturer. In the duopoly case, we distinguish a Cournot competition and a market with the manufacturer as Stackelberg leader. The results of a numerical study show that both firms will use posted pricing in the Cournot competition, especially if bargaining is not costless. By contrast, the remanufacturer can significantly increase his profit by using negotiations if he is the Stackelberg follower.

To License or Not to License Remanufacturing Business?

“…Wei et al [19] described the status of quantitative research on core acquisition management. Gonsch [20] focused on the manufacturer's acquisition of used products, using a posted price or bargaining with consumers. Kleber et al [21] addressed the question whether a buyback option should be offered by OEMs to retailers, and which buyback price should be paid for each returned core by using a deterministic framework.…”

A note on a model to evaluate acquisition price and quantity of used products for remanufacturing

“…That acquisition prices can be used to control returns is not only intuitive, but also a widespread assumption in the current literature (see Gönsch (2014) and the references cited therein). For example, Bulmus et al (2014) use it to analyze competition for used products and Cai et al (2014) to study acquisition and production planning for a joint manufacturing and remanufacturing system.…”

“…Xiong et al (2014) investigated dynamic pricing for used products with lost sales and uncertain quality. Gönsch (2014) considers negotiations to acquire used products and contains references to various prior studies and surveys. Although these studies do not consider the unique multi-stage setting with collection and consolidation centers of Pokharel and Liang (2012), we think that this basic economic principle can also be applied here.…”

Strategic Grading in the Product Acquisition Process of a Reverse Supply Chain

“…In the second strategy, the collector bargains with the product holder. Furthermore, Gönsch (2014) shows how competition from a thirdparty remanufacturer influences the results, compared with a monopolistic setting. The main difference from our work is that Gönsch (2014) considers only one time period, and thus does not focus on the negotiation process itself.…”

“…Furthermore, Gönsch (2014) shows how competition from a thirdparty remanufacturer influences the results, compared with a monopolistic setting. The main difference from our work is that Gönsch (2014) considers only one time period, and thus does not focus on the negotiation process itself. He instead divides the total surplus of the product submission by a factor describing the relative bargaining power of each player.…”