The Remanufacturing Strategy Of Durable Goods Enterprise Based On Consumer’s Utility

The manufacture of durable goods has maintained a country’s many aspects of economic activity, including the level of employment, industrial production and industrial profit. Recently, the production and consumption of durable goods are growing, in 2010, the consumer durable goods expenditures was 7908.7679 billion dollars in USA and 1020 billion Yuan in China. However, a lot of scrap of durable goods caused seriously environmental pollution problems. Since the key components of the scrapping durable goods still have the residual value, then a wave of products remanufacturing has set off, such as Caterpillar, BMW, Volkswagen. Apple, IBM, HP, Dell and other companies. At the same time, the researches on remanufacturing management are like a raging fire spread. But the existing remanufacturing management literatures don’t discuss the durable goods remanufactured. For this reason, the remanufacturing strategy is discussed in this paper combining the characters of durable goods, such as the existence of the secondary market, repeated use and quality uncertainty.First of all, based on the consumer utility theory and steady state equilibrium, the optimal decision model is built for durable goods monopoly to choose remanufacturing strategy without the existence of secondary market, and the remanufacturing strategy selection problem of durable goods monopoly is discussed. The critical conditions of durable goods monopoly firms to choose remanufacturing strategy are put forward, and the factors, which affect the remanufacturing strategy choice of durable goods monopoly, are discussed, such as durable goods value, durability, and manufacturing costs and the consumer willingness to pay for the remanufacturing durable goods. By comparative analysis, the conclusion is put forward that is durable goods monopoly should choose the recovery mode of remanufacturing strategy when second-hand market doesn’t exist; Combined with the construction machinery remanufacturing of Caterpillar Inc., the conclusions are discussed.Secondly, the optimal decision model is constructed for durable goods monopoly to choose remanufacturing strategy with the existence of secondary market, and the remanufacturing strategy selection problem of durable goods monopoly is discussed. The critical conditions of durable goods monopoly firms to choose remanufacturing strategy are put forward and the research shows that with the existence of secondary market, durable goods monopoly should choose the trade-ins mode of remanufacturing strategy. The higher durable goods value, durability, and the consumer willingness to pay for the remanufacturing durable goods are, the more should durable goods monopoly choose the trade-ins mode of remanufacturing strategy. The existence of secondary market exacerbated the degree of competition in durable goods markets and reduces the profits of durable goods monopoly. If the durable goods value is higher and the remanufacturing costs are lower, the existence of secondary market has more influence on the decision of durable goods monopoly. The Apple Corp’s iPad remanufacturing case is used to verify the relevant conclusions.Thirdly, the durable goods monopolist remanufacturing strategy selection problems are discussed by considering the conditions of the existence of the secondary market, repeated use and quality uncertainty. The critical conditions of durable goods monopoly firms to choose the recovery and the trade-ins mode of remanufacturing strategy are put forward. Durable goods monopoly should give greater price discounts for the trade-ins customers in order to encourage repeated purchases. When durable goods quality is uncertainty, durable goods monopoly should choose the trade-ins mode of remanufacturing strategy. By using the printer remanufacturing of HP, the conclusions are analyzed.