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Upgrading Strategy, Warranty Policy and Pricing Decisions for Remanufactured Products Sold with Two-Dimensional Warranty

Authors: Esmat Baghdadi; Mahmood Shafiee; Babakalli Alkali;

Upgrading Strategy, Warranty Policy and Pricing Decisions for Remanufactured Products Sold with Two-Dimensional Warranty

Abstract

The environmental sustainability and business benefits of end-of-life products have led to worldwide growth in the remanufacturing market. However, customers are often sceptical about the quality and durability of remanufactured products. To ensure a risk-free customer experience, dealers carry out some upgrading actions on the most critical components and offer a reasonable warranty period on products at the time of resale. It is crucial for dealers to consider customers’ attitudes and preferences when deciding on an upgrading strategy, warranty coverage, and sales price for remanufactured products. This paper aims to establish an equilibrium between customers’ expected costs and dealers’ expected profit for remanufactured products sold with a two-dimensional warranty and post-warranty service. In our model, customers make their decisions based on cost–benefit balance, whereas dealers make decisions that maximise their profit margin. Owing to the nature of the conflict between the dealer and customers, a Stackelberg game model is developed to optimise the upgrade strategy, warranty policy, and pricing decisions for remanufactured products. The Karush–Kuhn–Tucker (KKT) optimality condition of the lower-level problem is used to solve the model. Finally, a numerical example is provided to illustrate its applicability.

Country
United Kingdom
Keywords

Monitoring, two-dimensional warranty, Energy Engineering and Power Technology, TJ807-830, Stackelberg game theory, Environmental Science (miscellaneous), TD194-195, remanufacturing, Renewable energy sources, TA168, GE1-350, SDG 7 - Affordable and Clean Energy, Renewable Energy, upgrading, Planning and Development, Geography, Sustainability and the Environment, Policy and Law, Environmental effects of industries and plants, post-warranty, TA403, Management, end-of-life products, Environmental sciences, remanufacturing; end-of-life products; upgrading; two-dimensional warranty; Stackelberg game theory; post-warranty, TJ

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    citations
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    8
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Top 10%
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Top 10%
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citations
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
8
Top 10%
Average
Top 10%
gold