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Sustainability 2018, 10(11), 4090; https://doi.org/10.3390/su10114090

Sustainable Decisions on Product Upgrade Confrontations with Remanufacturing Operations

1
School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
2
The Business school, Chengdu University of Technology, Chengdu, 610059, China
3
College of Communication Art, Chongqing University of Posts and Telecommunications, Chongqing 400000, China
4
School of Construction Management and Real Estate, Chongqing University, Chongqing 400030, China
5
The Business School, University of Hull, Hull HU6 7RX, UK
*
Author to whom correspondence should be addressed.
Received: 5 October 2018 / Revised: 31 October 2018 / Accepted: 5 November 2018 / Published: 7 November 2018
(This article belongs to the Special Issue Product Innovation and Sustainability)
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Abstract

In recent decades, remanufacturing is perceived to be an environmentally friendly option due to the reduced consumption of materials, energy etc. It should be noted that whether the remanufacturing operations are undertaken by the original equipment manufacturers (OEMs) or outsourced to the remanufacturers, given the size and the growth of remanufactured products, many OEMs intend to fend off the potential cannibalization of new products sales through differentiating their quality levels from those of remanufactured ones by launching upgraded versions. To understand whether and how the product upgrading strategy impacts on optimal outcomes in the context of the remanufacturing operations undertaken by OEMs or third-party remanufacturers (TPRs), in this paper, we develop two models that highlight the OEM’s product upgrading strategy under the scenarios where (1) the OEM owns its remanufacturing operations in-house (Model O) or (2) remanufacturing operations are undertaken by a TPR (Model T). Among other results, we find that, from an economic performance perspective, it is more beneficial for the OEM to perform remanufacturing operations in-house; however, from an environmental sustainability perspective, such behavior is not always good for our environment. In particular, when the level of product upgrading is pronounced, the remanufacturing operations undertaken by the OEM are always detrimental to our environment, due to indulging in remanufacturing, as seen in Model O. View Full-Text
Keywords: sustainability; environmental impacts; product upgrading; remanufacturing; game theory sustainability; environmental impacts; product upgrading; remanufacturing; game theory
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Sun, L.; Zhang, L.; Li, Y. Sustainable Decisions on Product Upgrade Confrontations with Remanufacturing Operations. Sustainability 2018, 10, 4090.

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