Optimal price and quantity of refurbished products

• 成果类型: Article
• 署名作者: Vorasayan, Jurnpol; Ryan, Sarah M.
• 署名单位: Nanyang Technological University; Iowa State University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• 发表日期: 2006
• 页码: 369-383
• 关键词: reverse logistics; Refurbishment; queueing networks; optimization

摘要

Many retail product returns can be refurbished and resold, typically at a reduced price. The price set for the refurbished products affects the demands for both new and refurbished products, while the refurbishment and resale activities incur costs. To maximize profit, a manufacturer in a competitive market must carefully choose the proportion of returned products to refurbish and their sale price. We model the sale, return, refurbishment, and resale processes in an open queueing network and formulate a mathematical program to find the optimal price and proportion to refurbish. Examination of the optimality conditions reveals the different situations in which it is optimal to refurbish none, some, or all of the returned products. Refurbishing operations may increase profit or may be required to relieve a manufacturing capacity bottleneck. A numerical study identifies characteristics of the new product market and refurbished products that encourage refurbishing and some situations in which small changes in the refurbishing cost and quality provoke large changes in the optimal policy.