Determining end-of-life policy for recoverable products

We address a problem that arises for an original equipment manufacturer (OEM) who produces a product both in new and remanufactured forms. A remanufactured product is produced using the parts harvested from recovered products (cores) upon their disassembly, and it may contain some new parts while the excess good parts from cores are salvaged for profit. Other options are available to the OEM for handling cores that do not require disassembly. It follows that the per-unit remanufacturing cost is not constant and it may change depending on the number of recovered cores, good-part reclamation yields, and sales of remanufactured products. We present analytical results for determining an optimal solution with regard to: (i) quantity of cores to collect, (ii) end-of-life (EOL) options for the cores and (iii) product pricing of new and remanufactured products. Our analysis reveals existence of a ‘limiting part’ that dictates the number of cores to collect and a ‘key part’ that determines the number of remanufactured products to make as well as the fact that the availability of cores does not impact the EOL policy type for a product. Our analysis also enables mapping of product characteristics onto corresponding EOL policy types.