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This study aims to investigate the optimal inventory and pricing policies in a decentralized production/remanufacturing system with multiple refurbished components. A basic inventory problem with deterministic demand rate and return rate is considered. The manufacturer purchases recycled components from the collector, and sells remanufactured products as well as new products to customers. It is assumed that the customers tend to pay different prices for remanufactured products and new products. Both the manufacturer and the collector try to maximize their own profits. The equilibrium of the problem is formulated as a variational inequality. Numerical examples show that the manufacturer and the collector can change the retail prices and return-facilitating costs to influence the product demands and the quantity of returned end-of-use products, such that no surplus or shortage of any products and components will occur.

A Decentralized Production/Remanufacturing Inventory Model with Multiple Refurbished Components