Manufacturer-remanufacturing vs supplier-remanufacturing in a closed-loop supply chain

Abstract

Remanufacturing at the component level could be performed by either a manufacturer or a supplier. In this paper, we analyze the performance of manufacturer-remanufacturing and supplier-remanufacturing in a decentralized closed-loop supply chain, and examine their desirability from different stakeholder perspectives. We find that the manufacturer may engage in remanufacturing of used components even if remanufacturing is costlier than traditional manufacturing; given remanufacturing is costlier, the manufacturer may forgo remanufacturing due to a marginal increase in consumer willingness-to-pay for the remanufactured product. If the unit remanufacturing cost is high enough, the manufacturer and consumers prefer manufacturer-remanufacturing, while the supplier and the environment prefer supplier-remanufacturing; otherwise, the manufacturer, the supplier, and consumers prefer supplier-remanufacturing, while the environment׳s preference is contingent on the environmental impact discount for the remanufactured product. Finally, the key findings are distilled into a roadmap to guide the development of remanufacturing.

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