EURO 2025 Leeds
Abstract Submission

2024. Optimal Product Recovery Strategies Under Competition

Invited abstract in session WC-42: Product recovery and remanufacturing, stream Circular & Sustainable Supply Chains.

Wednesday, 12:30-14:00
Room: Newlyn GR.02

Authors (first author is the speaker)

1. Song LIU
IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management
2. Maud Van den Broeke
Operations and Supply Chain Management, Ieseg School of Management
3. Tanja Mlinar
IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management
4. Stefan Creemers
UCLouvain

Abstract

Growing environmental concerns and stricter regulations drive Original Equipment Manufacturers (OEMs) to adopt product recovery strategies, such as remanufacturing and recycling. Meanwhile, OEMs are increasingly confronted with the competition of independent remanufacturers (IRs). This triggers decision makers to investigate their optimal product recovery strategy (remanufacturing, recycling, or a combination of the two), the optimal level of product returns, and the impact of OEM-IR competition on these decisions. For this purpose, we develop an analytical model with two profit-maximizing stakeholders: the OEM and an IR. Whereas the IR only competes through remanufacturing, the OEM manufactures new products and can recover used products through remanufacturing, recycling, or both. We further examine the consequences on the environmental and social welfare performance of the OEM's and IR’s product recovery strategies. We derive the optimal product recovery strategy as well as the conditions for the IR to enter the market. We find that a hybrid strategy (simultaneously remanufacturing and recycling) can be optimal, and that a higher collection cost increases the likelihood of remanufacturing for both the OEM and IR. Furthermore, we find that competition boosts the overall collection rate of used products. Our research offers managers and policy makers a deeper understanding of how competition and different cost parameters impact product recovery strategies.

Keywords

Status: accepted

Back to the list of papers