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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.

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Figures

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)

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