Premium
Effects of Random Yield in Remanufacturing with Price‐Sensitive Supply and Demand
Author(s) -
Bakal Ismail Serdar,
Akcali Elif
Publication year - 2006
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2006.tb00254.x
Subject(s) - remanufacturing , profitability index , yield (engineering) , reuse , product (mathematics) , supply chain , business , process (computing) , supply and demand , industrial organization , automotive industry , microeconomics , economics , computer science , marketing , manufacturing engineering , mathematics , finance , ecology , materials science , geometry , biology , engineering , metallurgy , operating system , aerospace engineering
In this study, we investigate the effects of recovery yield rate on pricing decisions in reverse supply chains. Motivated by the automotive parts remanufacturing industry, we consider an end‐of‐life product from which a particular part can be recovered and remanufactured for reuse, and the remainder of the product can be recycled for material recovery. Both the supply of end‐of‐life products and demand for remanufactured parts are price‐sensitive. Yield of the recovery process is random and depends on the acquisition price offered for the end‐of‐life products. In this setting, we develop models to determine the optimal acquisition price for the end‐of‐life products and the selling price for remanufactured parts. We also analyze the effects of yield variation to the profitability of remanufacturing, benefits of delaying pricing decisions until after yield realization, and value of perfect yield rate information.