Research Papers

Market Positioning of Remanufactured Products With Optimal Planning for Part Upgrades

[+] Author and Article Information
Minjung Kwak

e-mail: kwak14@illinois.edu

Harrison Kim

e-mail: hmkim@illinois.edu
Department of Industrial and Enterprise Systems Engineering,
University of Illinois at Urbana-Champaign,
Urbana, IL61801

1Corresponding author.

Contributed by Design Automation Committee of ASME for publication in the Journal of Mechanical Design. Manuscript received August 12, 2011; final manuscript received October 22, 2012; published online December 12, 2012. Assoc. Editor: Bernard Yannou.

J. Mech. Des 135(1), 011007 (Dec 12, 2012) (10 pages) Paper No: MD-11-1342; doi: 10.1115/1.4023000 History: Received August 12, 2011; Revised October 22, 2012

In a market with rapid changes in technology and customer preferences, technological obsolescence of end-of-life products poses a significant challenge to product recovery. Remanufacturing with optimal part upgrades can be a promising solution for overcoming the obsolescence. This paper proposes a model for positioning a remanufactured product. By considering original product design, target market (i.e., customer preferences and competing products), and recovery economics, the model helps to find optimal specifications and the selling price of a remanufactured product at which maximum remanufacturing profit is expected. Two versions of the model are presented under different assumptions on product takeback. The first model assumes that the remanufacturer passively accepts all returns without paying any financial incentives. The second model assumes that the remanufacturer buys back end-of-life products so as to control the quality and quantity of returns. The two models are illustrated with the example of a desktop computer.

Copyright © 2013 by ASME
Your Session has timed out. Please sign back in to continue.


Pearce, J. A., II, 2008, “In With the Old,” Wall Street J. Available at http://online.wsj.com/article/SB122427020019745211.html
Kwak, M., and Kim, H. M., 2010, “Assessing Product Family Design From an End-of-Life Perspective,” Eng. Optim., 43(3), pp. 233–255. [CrossRef]
Xing, K., Belusko, M., Luong, L., and Abhary, K., 2007, “An Evaluation Model of Product Upgradeability for Remanufacture,” Int. J. Adv. Manuf. Technol., 35(1–2), pp. 1–14. [CrossRef]
Rachaniotis, N. P., and Pappis, C. P., 2008, “Preventive Maintenance and Upgrade System: Optimizing the Whole Performance System by Components’ Replacement or Rearrangement,” Int. J. Prod. Econ., 112(1), pp. 236–244. [CrossRef]
Lund, R. T., and Hauser, W. M., “Remanufacturing—An American Perspective,” Proceedings of the 5th International Conference on Responsive Manufacturing (ICRM), January 11–13, 2010, Ningbo, China, pp. 1–6.
Kerr, W., and Ryan, C., 2001, “Eco-Efficiency Gains From Remanufacturing: A Case Study of Photocopier Remanufacturing at Fuji Xerox Australia,” J. Cleaner Prod., 9(1), pp. 75–81. [CrossRef]
Guide, V. D. R., Teunter, R. H., and Van Wassenhove, L. N., 2003, “Matching Demand and Supply to Maximize Profits From Remanufacturing,” Manuf. Serv. Oper. Manage., 5(4), pp. 303–316. [CrossRef]
Guide, V. D. R., and Van Wassenhove, L. N., 2001, “Managing Product Returns for Remanufacturing,” Prod. Oper. Manage., 10(2), pp. 142–155. [CrossRef]
Hazelrigg, G. A., 1998, “A Framework for Decision-Based Engineering Design,” ASME J. Mech. Des., 120(4), pp. 653–658. [CrossRef]
Wassenaar, H. J., and Chen, W., 2003, “An Approach to Decision-Based Design With Discrete Choice Analysis for Demand Modeling,” ASME J. Mech. Des., 125(3), pp. 490–497. [CrossRef]
Gu, X., Renaud, J. E., Ashe, L. M., Batill, S. M., Budhiraja, A. S., and Krajewski, L. J., 2002, “Decision-Based Collaborative Optimization,” ASME J. Mech. Des., 124(1), pp. 1–13. [CrossRef]
Kumar, D. K. D., Chen, W., and Kim, H. M., 2006, “Multilevel Optimization for Enterprise-Driven Decision-Based Product Design,” Decision Making in Engineering Design, E. L.Kemper, C.Wei, and C. S.Linda, eds., ASME Press, New York.
Michalek, J. J., Papalambros, P. Y., and Skerlos, S. J., 2004, “A Study of Fuel Efficiency and Emission Policy Impact on Optimal Vehicle Design Decisions,” ASME J. Mech. Des., 126(6), pp. 1062–1070. [CrossRef]
Frischknecht, B. D., Whitefoot, K., and Papalambros, P. Y., 2010, “On the Suitability of Econometric Demand Models in Design for Market Systems,” Trans. ASME J. Mech. Des., 132(12), p. 121007. [CrossRef]
Wilhelm, E. W., Damodaran, P., and Li, J., 2003, “Prescribing the Content and Timing of Product Upgrades,” IIE Trans., 35(7), pp. 647–663. [CrossRef]
Singh, P., and Sandborn, P., 2006, “Obsolescence Driven Design Refresh Planning for Sustainment-Dominated Systems,” Eng. Econ., 51(2), pp. 115–139. [CrossRef]
Sand, J. C., and Gu, P., 2006, “Adaptex: Extending Product Life Cycles Through Strategic Product Upgrades,” Advances in Design, H. A.ElMaraghy and W. H.ElMaraghy, eds., Springer, London, pp. 111–119.
Östlin, J., Sundin, E., and Björkman, M., 2009, “Product Life-Cycle Implications for Remanufacturing Strategies,” J. Cleaner Prod., 17(11), pp. 999–1009. [CrossRef]
Bras, B., 2007, “Design for Remanufacturing Processes,” Environmentally Conscious Mechanical Design, M.Kutz, ed., Wiley, Hoboken, NJ, pp. 283–318.
Li, Y., Xue, D., and Gu, P., 2008, “Design for Product Adaptability,” Concurr. Eng. Res. Appl., 16(3), pp. 221–232. [CrossRef]
Umemori, Y., Kondoh, S., Umeda, Y., Shimomura, Y., and Yoshioka, M., 2001, “Design for Upgradable Products Considering Future Uncertainty,” Proceedings EcoDesign 2001: Second International Symposium on Environmentally Conscious Design and Inverse Manufacturing, pp. 87–92. [CrossRef]
Ishigami, Y., Yagi, H., Kondoh, S., Umeda, Y., Shimomura, Y., and Yoshioka, M., 2003, “Development of a Design Methodology for Upgradability Involving Changes of Functions,” Proceedings of the EcoDesign '03: 3rd International Symposium on Environmentally Conscious Design and Inverse Manufacturing, pp. 235–242.
Guide, V. D. R., 2000, “Production Planning and Control for Remanufacturing: Industry Practice and Research Needs,” J. Oper. Manage., 18(4), pp. 467–483. [CrossRef]
Umeda, Y., Kondoh, S., and Sugino, T., 2006, “Analysis of Reusability Using ‘Marginal Reuse Rate,” Ann. CIRP-Manuf. Technol., 55(1), pp. 41–44. [CrossRef]
Vadde, S., Kamarthi, S. V., and Gupta, S. M., 2007, “Optimal Pricing of Reusable and Recyclable Components Under Alternative Product Acquisition Mechanisms,” Int. J. Prod. Res., 45(18–19), pp. 4621–4652. [CrossRef]
Mitra, S., 2007, “Revenue Management for Remanufactured Products,” Omega, 35(5), pp. 553–562. [CrossRef]
Vorasayan, J., and Ryan, S. M., 2006, “Optimal Price and Quantity of Refurbished Products,” Prod. Oper. Manage., 15(3), pp. 369–383. [CrossRef]
Ferrer, G., and Swaminathan, J. M., 2010, “New and Differentiated Remanufactured Products,” Eur. J. Oper. Res., 203(2), pp. 370–379. [CrossRef]
Vadde, S., Zeid, A., and Kamarthi, S. V., 2011, “Pricing Decisions in a Multi-Criteria Setting for Product Recovery Facilities,” Omega, 39(2), pp. 186–193. [CrossRef]
Mangun, D., and Thurston, D. L., 2002, “Incorporating Component Reuse, Remanufacture, and Recycle Into Product Portfolio Design,” IEEE Trans. Eng. Manage., 49(4), pp. 479–490. [CrossRef]
Jayaraman, V., 2006, “Production Planning for Closed-Loop Supply Chains With Product Recovery and Reuse: An Analytical Approach,” Int. J. Prod. Res., 44(5), pp. 981–998. [CrossRef]
Franke, C., Basdere, B., Ciupek, M., and Seliger, S., 2006, “Remanufacturing of Mobile Phones—Capacity, Program and Facility Adaptation Planning,” Omega, 34(6), pp. 562–570. [CrossRef]
Kwak, M., and Kim, H. M., 2010, “Evaluating End-of-Life Recovery Profit by a Simultaneous Consideration of Product Design and Recovery Network Design,” ASME J. Mech. Des., 132(7), p. 071001. [CrossRef]
Zhao, Y., Pandey, V., Kim, H., and Thurston, D., 2010, “Varying Lifecycle Lengths Within a Product Take-Back Portfolio,” ASME J. Mech. Des., 132(9), p. 091012. [CrossRef]
Tsubouchi, K., and Takata, S., 2007, “Module-Based Model Change Planning for Improving Reusability in Consideration of Customer Satisfaction,” Proceedings of the 14th CIRP-LCE, pp. 11–16.
Chung, W. H., Okudan, G. E., and Wysk, R. A., 2010, “An Optimal Upgrade Strategy for Product Users Considering Future Uncertainty,” Proceedings of the IIE Annual Conference and Expo 2010, (IERC 2010), Cancun, Mexico.
MacDonald, E., Whitefoot, K., Allison, J. T., Papalambros, P. Y., and Gonzalez, R., 2010, “An Investigation of Sustainability, Preference, and Profitability in Design Optimization,” Proceedings of the ASME IDETC/CIE, Paper No. DETC2010-29055.
Geyer, R., and Jackson, T., 2004, “Supply Loops and Their Constraints: The Industrial Ecology of Recycling and Reuse,” Calif. Manage. Rev., 46(2), pp. 55–73. [CrossRef]
Guide, V. D. R., and Wassenhove, L. N. V., 2009, “OR Forum—The Evolution of Closed-Loop Supply Chain Research,” Oper. Res., 57(1), pp. 10–18. [CrossRef]
Fleischmann, M., and Krikke, H. R., 2000, “A Characterisation of Logistics Networks for Product Recovery,” Omega, 28(6), pp. 653–666. [CrossRef]
Kwak, M., Behdad, S., Zhao, Y., Kim, H. M., and Thurston, D., 2011, “E-Waste Stream Analysis and Design Implications,” ASME J. Mech. Des., 133(10), p. 101003. [CrossRef]
Kwak, M., Kim, H. M., and Thurston, D., 2011, “Formulating Second-Hand Market Value as a Function of Product Specifications, Age, and Conditions,” ASME J. Mech. Des., 134(3), p. 032001. [CrossRef]
Klausner, M., and Hendrickson, C. T., 2000, “Reverse-Logistics Strategy for Product Take-Back,” Interfaces, 30(3), pp. 156–165. [CrossRef]
Ben-Akiva, M., and Lerman, S., 1985, Discrete Choice Analysis: Theory and Application to Travel Deman, The MIT Press, Cambridge, Massachusetts.
Green, P. E., Krieger, A. M., and Wind, Y., 2001, “Thirty Years of Conjoint Analysis: Reflections and Prospects,” Interfaces, 31(3), pp. S56–S73. [CrossRef]
Jiao, J., and Zhang, Y., 2005, “Product Portfolio Planning With Customer-Engineering Interaction,” IIE Trans., 37(9), pp. 801–814. [CrossRef]
Kwak, M., and Kim, H. M., 2011, “Modelling Time-Varying Value of an End-of-Life Product for Design for Recovery,” Proceedings of the 18th International Conference on Engineering Design (ICED11), Copenhagen, Denmark, pp. 70–80.
Bhuie, A. K., Ogunseitan, O. A., Saphores, J.-D. M., and Shapiro, A. A., 2004, “Environmental and Economic Trade-Offs in Consumer Electronic Products Recycling: A Case Study of Cell Phones and Computers,” Proceedings of the IEEE International Symposium on Electronics and the Environment, pp. 74–79.
Hewlett-Packard Development Company, “Why Buy Remanufactured?,” 2012; http://www.hp.com/united-states/renew/why_buy_refurbished.html
Guide, V. D. R., and Li, J., 2010, “The Potential for Cannibalization of New Products Sales by Remanufactured Products,” Decis. Sci., 41(3), pp. 547–572. [CrossRef]
Montaldo, D. L., “Tips for Buying Refurbished Computers,” 2012; http://couponing.about.com/od/computers/a/refurbs_computers.htm
Tucker, C. S., and Kim, H. M., 2011, “Trending Mining for Predictive Product Design,” ASME J. Mech. Des., 133(11), p. 111008. [CrossRef]
Rutherford, D. P., and Wilhelm, W. E., 1999, “Forecasting Notebook Computer Price as a Function of Constituent Features,” Comput. Ind. Eng., 37(4), pp. 823–845. [CrossRef]


Grahic Jump Location
Fig. 1

Integrated model for market positioning of a remanufactured product

Grahic Jump Location
Fig. 2

Upgrade decision and its implication on parts procurement and resale

Grahic Jump Location
Fig. 3

Remanufacturing operation and product/part flow volumes

Grahic Jump Location
Fig. 4

Optimal market position for Reman X (t = 4)



Some tools below are only available to our subscribers or users with an online account.

Related Content

Customize your page view by dragging and repositioning the boxes below.

Related Journal Articles
Related eBook Content
Topic Collections

Sorry! You do not have access to this content. For assistance or to subscribe, please contact us:

  • TELEPHONE: 1-800-843-2763 (Toll-free in the USA)
  • EMAIL: asmedigitalcollection@asme.org
Sign In