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Optimal Order Quantities with Remanufacturing Across New Product Generations
Author(s) -
Bhattacharya Shantanu,
Guide V. Daniel R.,
Wassenhove Luk N.
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.tb00255.x
Subject(s) - remanufacturing , stackelberg competition , order (exchange) , product (mathematics) , business , economic order quantity , computer science , operations research , optimal decision , channel coordination , industrial organization , supply chain , microeconomics , manufacturing engineering , marketing , supply chain management , mathematics , economics , decision tree , geometry , finance , artificial intelligence , engineering
We address the problem of determining the optimal retailer order quantities from a manufacturer who makes new products in conjunction with ordering remanufactured products from a remanufacturer using used and unsold products from the previous product generation. Specifically, we determine the optimal order quantity by the retailer for four systems of decision‐making: (a) the three firms make their decisions in a coordinated fashion, (b) the retailer acts independently while the manufacturer and remanufacturer coordinate their decisions, (c) the remanufacturer acts independently while the retailer and manufacturer coordinate their decisions, and (d) all three firms act independently. We model the four options described above as centralized or decentralized decision‐making systems with the manufacturer being the Stackelberg leader and provide insights into the optimal order quantities. Coordination mechanisms are then provided which enable the different players to achieve jointly the equivalent profits in a coordinated channel.