Optimal Remanufacturing Certification Contracts in the Electrical and Electronic Industry

Abstract

While remanufacturing is highly encouraged worldwide, some original equipment manufacturers (OEMs) in the electrical and electronics industry are still not willing to embrace remanufacturing, for fear of expensive investment or the cannibalization of existing products. Meanwhile, third-party remanufacturers' (TPRs) remanufactured products are developing quickly. Due to quality reasons, consumers usually have a higher preference for OEM-certified remanufactured products than uncertified ones. As such, remanufacturing certification has become a strategy that OEMs can use to benefit from product remanufacturing. Our paper focuses on the remanufacturing certification contract between an OEM and a TPR. Once certified, the TPR makes payments to the OEM. These payment terms will affect their enthusiasm for participating in remanufacturing certification. By establishing game models among an OEM, a certified TPR, and an uncertified TPR, our paper explores three certification contracts, namely, the lump-sum payment, profit-sharing payment, and piece-rate payment. We identify the conditions for the OEM and certified TPR to reach a win-win outcome. Our results show that when TPRs have a high profit margin and there is no significant difference in consumers' preferences between certified and non-certified remanufacturing channels, the profit-sharing payment contract yields the highest profit; otherwise, the piece-rate payment contract is best for the OEM.

An Insight into Reverse Logistics with a Focus on Collection Systems

“…Government regulations are a major impetus driving remanufacturing [59]. An example of a manufacturer incentive is the take-back laws or TPR (third-party remanufacturers) to manage e-waste [107]. Another policy is the government subsidy to motivate manufacturer collection [78] and remanufacture [85].…”

Economic and Environmental Implications of Quality Choice under Remanufacturing Outsourcing

“…Similarly, Kodak extends some components' life by remanufacturing them [5]. According to a survey from the US International Trade Commission, in 2011, the remanufacturing industry created economic benefits of about $43 billion in the USA market [6]. On the other hand, remanufacturing is a product recovery strategy that helps promote sustainable development, due to the immediate consequence of the material reduction [1,7].…”

Influence of the Environment on the Reliability of Security Magnetic Contacts

“…However, the certification takes place according to a predetermined methodological procedure, considers selected options for overcoming, and, last but not least, is performed under laboratory conditions. However, the potential perpetrator will not follow the methodological procedures or the technical standard permitted tools or objects when trying to overcome the security of the object [ 31 , 32 ]. Testing of alarm system components and detectors must be carried out as much as possible under non-standard conditions because only then is it possible to identify a higher degree of their reliability.…”