Pricing Decision for New and Remanufactured Product in a Closed-loop Supply Chain with Separate Sales-channel

Remanufacturing is one of the recovery processes that transforms a used product into a “like-new” product, and usually comes with similar warranty to the new product. Many manufacturers have concerns that remanufacturing might cannibalize the sales of the new product. Recent development shows an increasing trend in selling products through non-traditional channels such as manufacturer’s direct channel or e-channel. We develop a pricing decision model for short life-cycle product in a closed-loop supply chain that consists of manufacturer, retailer, and collector. New product is sold via traditional retail store and remanufactured product is sold via manufacturer’s direct channel, such as factory outlet. We introduce two scaling factors; the first represents customer’s acceptance towards buying remanufactured product, and the second represents customer’s preference to buy remanufactured product via direct channel. The results show that implementing separate channel can improve the total supply chain’s profit compared to single-channel approach. We also find that both scaling factors influence pricing decisions and the profits of the supply chain members