Collection Pricing Decision in a Remanufacturing System Considering Random Yield and Random Demand

Abstract

In a remanufacturing system considering random yield and random demand, the enterprise pays for the used product to end users to control the collection quantity. The collection price is determined before the random yield is realized, and the selling price is determined before the demand randomness is realized. The objective is to maximize the enterprise's utilization, which is the mean-variance function of the profit. An optimization model is addressed to derive the analytical solution of the optimal selling price, given the quantity of remanufactured products. Moreover, the uniqueness of the optimal collection price is proved with consideration of the risk attitude of the remanufacturer. The extensions to the model are developed and the numerical examples are provided to show the influence of the parameters on the system.