The Impact of Remanufacturing on the Component Commonality Decision

Posted: 28 Dec 2008

See all articles by Ravi Subramanian

Ravi Subramanian

Georgia Institute of Technology - Scheller College of Business

Mark Ferguson

University of South Carolina - Department of Management Science

L. Beril Toktay

Georgia Institute of Technology - Sustainability

Date Written: February 2008

Abstract

Using the classic market segmentation approach, we analyze the impact of a firm's remanufacturing operations on its component commonality decision. We find that the decision to make a component common or not may be reversed with the inclusion of remanufacturing, and this reversal is influenced by whether or not the candidate component requires reconditioning and the extent to which the component diminishes the perceived difference between the high and low-quality products. A large-scale numerical analysis shows that the detrimental impact on profit of not factoring in remanufacturing can be significant, provides guidance on the likelihood and severity of this impact under different conditions, and identifies the set of parameters that are the most important to focus on.

Keywords: Component Commonality, Market Segmentation, Remanufacturing

Suggested Citation

Subramanian, Ravi and Ferguson, Mark and Toktay, L. Beril, The Impact of Remanufacturing on the Component Commonality Decision (February 2008). Available at SSRN: https://ssrn.com/abstract=1320723

Ravi Subramanian (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Mark Ferguson

University of South Carolina - Department of Management Science ( email )

United States

L. Beril Toktay

Georgia Institute of Technology - Sustainability ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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