Impact of Different Recycling Channels on Outsourcing Remanufacturing

Abstract

In the closed-loop supply chain of recycling and remanufacturing of used products, this study establishes three game models of recycling channels: original manufacturer recycling, remanufacturer recycling, and retailer recycling. Further, we make a comparative analysis of product prices, sales, used product recycling rate, outsourcing costs, and revenues in these models. Following is the main findings. 1) The recycling rate of used products is highest in the remanufacturer recycling channel but lowest in the retailer recycling channel. 2) The unit retail price of new products keeps consistent in the three recycling channels, while the unit outsourcing cost only changes in the remanufacturer recycling channel. 3) Both the original manufacturer and the remanufacturer prefer to recycle their used products by the driven of revenue maximization, however, retailers tend to recycle only under certain conditions. 4) The increase of remanufactured product preference and the decrease of remanufacturing rate facilitate remanufacturing.

Keywords: Recycling channels, Outsourcing remanufacturing, Original manufacturers, Remanufacturers, Closed-loop supply chain