COMPETITION IN REMANUFACTURING

Authors

  • PRANAB MAJUMDER,

    1. Simon School of Business, University of Rochester, Rochester, New York 14627, USA
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      Pranab Majumder is a Ph.D. candidate in Operations Management at the Simon School of Business, University of Rochester. He completed his B.Tech. from IIT Kanpur, India (Chemical Engineering, 1991) and his MBA from IIM Calcutta, India (Operations and Marketing, 1993). His current research includes remanufacturing, service operations, and classical inventory theory using game theoretic and utility models. His thesis work (advised by Dr. Harry Groenevelt) is titled Competition in Remanu-facturing and examines different competition structures and their effect on remanufacturing activity.

  • HARRY GROENEVELT

    1. Simon School of Business, University of Rochester, Rochester, New York 14627, USA
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      Harry Groenevelt (“Competition in Remanufacturing”) is Associate Professor of Operations Management at the William E. Simon Graduate School of Business Administration of the University of Rochester. His teaching and research interests are in logistics and inventory management; resource allocation; production-system scheduling, control, and maintenance; service system design; quality management; and healthcare operations management. He has been a consultant on logistics and operations issues for several multinationals and healthcare institutions. He has served as associate editor for MSOM and Management Science, and has published articles in Management Science, Operations Research, and European Journal of Operational Research among others.


Abstract

We present a two-period model of remanufacturing in the face of competition. In our model, an original equipment manufacturer (OEM) competes with a local remanufacturer (L) under many reverse logistics configurations for the returned items. After establishing the Nash Equilibrium in the second period sub-game, we use numerical experiments for comparative statics. OEM wants to increase L'S remanufacturing cost. Surprisingly, while L competes in the sales market, she has incentives to reduce oem's remanufacturing cost. A social planner who wants to increase remanufacturing can give incentives to the OEM to increase the fraction available for remanufacturing, or reduce his remanufacturing costs.

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