Optimal Pricing Policies For Remanufacured Products Under Heterogeneous Demand

With the lack of resources and environmental degradation, many coutries and companies aware that taking back old products and remanufacturing the end of use products is one means to save energy and cost and to develop sustainable economics. At present, due to the lack of scientific market desicion and effective pricing mechanism, many firms could not gain more profits from remanufactured products. In this regard, the optimal pricing strategy is issued; consider heterogeneous demand characteristics for consumer, this thesis research on the firm how to decise the optimal prices for remanufactured products and new products.Firstly, take into account that consumer's willingness to pay for remanufactured products is less than their willingness to pay for new products. study the static optimal price and two-period dynamic pricing of new products and remanufactured products .the results state that three strategies should be stated: if remanufacturing cost is higer than discount of the cost of new products, although, the remanufacturing cost is lower than the new products, remanufacturing could not be profitable, best strategy for manufacturer is only produce new products; if the remanufacturing cost is lower than discount of the cost of new products, but not very low, the manufacturer's optimal decision is the simultaneous producing new products and re-manufactured products; if the cost of remanufactured cost is much low, the best strategy is only remanufacturing the old products. On the other hand, remanufactured products not only cannibalize sales of new products, but make the whole market grow and the profit increasing. Therefore this thesis recommends that company can arouse environmental awareness of consumers, as well as improve the return rate to increase the profits.Secondly, on the basis of previous studies, In order to enable manufacturer to respond to a variety of market conditions, this thesis assume that market size is variable, and the market growth rate as an indicators for variable market size, this thesis study optimal pricing for remanufactured products under different market growth rates. It was found that market growth increase manufacturer's profits, also can increase the proportion of waste products refurbished. When the market is growing rapidly, the waste materials in short supply in the case, manufacturer must invest in collection, the shadow price of waste materials is given by the unit cost of investment.The conclusions are verified by numerical example. Thirdly, green consumer's preference differing from primary consumer's preference, this thesis issued on optimal pricing for the remanufactured products in multi-market of different green segment size. the result state the optimal price vary with green segment size, the price discrimination policy can make the manufacturer get more profits than same-price policy; and analyzed the threshold of price discrimination policy. Then we recommended manufacturers applying a high price strategy for remanufactured products if remanufacturing cost is high, and applying a low price strategy if the value discount for remanufactured products is high.Finally, game theory is used to explore supply chain's members (manufacturer and retailer) how to decise optimal price and sales for remanufactured products. When the independent wholesale and discount wholesale policy are provided to the manufacturer, the independent wholesale policy can make manufacturer more profits than the discount wholesale policy. Then a revenue sharing contract is designed to coordinate the supply chain.