Green profit maximization through joint pricing and production planning of new and remanufactured products

초록

To achieve green profit in their business, manufacturers who produce both new and remanufactured products must optimize their pricing and production decisions simultaneously. They must determine the buy-back price and take-back quantity of end-of-life products as well as the selling prices and production quantities of new and remanufactured products. With an aim to assist in optimal pricing and production planning, this paper presents a mixed-integer programming model that optimizes the three prices (of buyback, new and remanufactured products) and the corresponding production plan simultaneously. The model considers the two conflicting objectives of maximizing economic profitability and maximizing environmental impact saving. The model helps address potential barriers to remanufacturing, which include limited economic, and/or environmental sustainability of remanufacturing, imbalance between the supply of end-of-life products and the market demand for remanufactured products, and cannibalization of the sales of new products. The developed model is illustrated with an example of engine water pump. Copyright © 2013 by ASME.