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Open AccessArticle

The Effect of Introducing Upgraded Remanufacturing Strategy on OEM’s Decision

by 1, 1,2, 1,*, 3,*, 4 and 3
1
College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing 210016, China
2
Odette School of Business, University of Windsor, Windsor, ON N9B 3P4, Canada
3
College of Management, Anhui Science and Technology University, Huainan 241000, China
4
School of Management Engineering, Nanjing University of Information Science Technology, Nanjing 210044, China
*
Authors to whom correspondence should be addressed.
Sustainability 2018, 10(3), 828; https://doi.org/10.3390/su10030828
Received: 1 February 2018 / Revised: 22 February 2018 / Accepted: 8 March 2018 / Published: 15 March 2018
Although remanufacturing has great economic and environmental potential, internal cannibalization, and lack of consumer acceptance of remanufactured products prevent original equipment manufacturer (OEM) from realizing the full potential value through remanufacturing. Practices show that remanufactured products can realize their value by the donation, besides resale. Thus, this paper incorporates the donation of remanufactured products with government subsidy and presents an upgraded remanufacturing strategy to expand the demand for remanufactured products and weaken the internal cannibalization of remanufactured products. We respectively construct the two-period game model with and without upgraded remanufacturing and explore the effect of upgraded remanufacturing on production decision, economic and environmental benefits. The main conclusions are as follows. The donation subsidy is negatively related with the sale quantity of remanufactured products, but is positively related with the donation quantity of remanufactured products and the quantity of new products. The donation subsidy expands the demand for remanufactured products and weakens internal cannibalization of remanufactured products. Whether the upgraded remanufacturing strategy is profitable depends on the fixed cost of the remanufacturing. When consumers consider remanufactured products environmentally friendly, the government can realize an OEM’s win-win situation where the economic and environmental benefits get improved by adjusting the donation subsidy. Otherwise, introducing upgraded remanufacturing makes the environment worse. Comparatively speaking, a low-cost and environmentally friendly manufacturer is relatively easier to achieve the win-win situation through donation subsidy. View Full-Text
Keywords: closed-loop supply chain; corporate social responsibility; upgraded remanufacturing; charitable donation closed-loop supply chain; corporate social responsibility; upgraded remanufacturing; charitable donation
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MDPI and ACS Style

Li, B.; Wang, Z.; Wang, Y.; Tang, J.; Zhu, X.; Liu, Z. The Effect of Introducing Upgraded Remanufacturing Strategy on OEM’s Decision. Sustainability 2018, 10, 828. https://doi.org/10.3390/su10030828

AMA Style

Li B, Wang Z, Wang Y, Tang J, Zhu X, Liu Z. The Effect of Introducing Upgraded Remanufacturing Strategy on OEM’s Decision. Sustainability. 2018; 10(3):828. https://doi.org/10.3390/su10030828

Chicago/Turabian Style

Li, Bangyi; Wang, Zhe; Wang, Yue; Tang, Juan; Zhu, Xiaodong; Liu, Zhi. 2018. "The Effect of Introducing Upgraded Remanufacturing Strategy on OEM’s Decision" Sustainability 10, no. 3: 828. https://doi.org/10.3390/su10030828

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