Pricing and Warranty Level Decisions for New and Remanufactured Short Life-Cycle Products
Abstract: Remanufacturing has
become more prominent as a recovery process to mitigate the massive disposal of
short life-cycle product at its end-of-use. However, remanufactured product isoften
perceived to be inferior to new product, and it has lower value in consumer’s
willingness to pay. To increase the perceived quality of the remanufactured
product, manufacturer offers awarranty, since one of the three roles possessed
in warranty is being a signal to product reliability. This paper studies the
pricing decisions and warranty level decision for new andremanufactured
products in a closed-loop supply chain consists of a manufacturer and a
retailer.The optimization modeling is performed under Stackelberg game with
manufacturer as the leader. We found that higher expansion effectiveness
coefficient would increase the supply chainprofit. Also, there is an interval
of demand’s speed of change, where the total profit would be atits highest. The
optimum warranty level can be achieved regardless the initial warranty level
setat the beginning of retailer’s optimization. Furthermore, the remanufactured
product’s wholesaleand retail prices are influenced by the expansion
effectiveness coefficient.
Penulis: Shu-San Gan, I Nyoman
Pujawan
Kode Jurnal: jptindustridd170032
