Remanufacturing authorization strategies in closed-loop supply chains

Abstract

Remanufacturing authorization is an industry practice whereby original equipment manufacturers (OEMs) authorize independent remanufacturers (IRs) to conduct remanufacturing operations by providing necessary technical support. In return, IRs who accept authorization need to share their remanufacturing profit with OEMs by paying an authorization fee. Remanufacturing authorization has received growing attention either from OEMs or from IRs because of the high profitability of the remanufacturing business and the rising competition in the remanufacturing market. However, the main concern is that customers’ demand for new products will be severely cannibalized by the existence of remanufactured products. While existing studies have examined OEMs’ and IRs’ strategies for authorization cooperation, the question of how to design a proper authorization cooperation contract so that a win-win outcome can be reached remains unanswered. This thesis aims to study the remanufacturing authorization cooperation between an OEM and a remanufacturer, where the latter can be an IR or a contract manufacturer (CM), by employing game-theoretical models. Four studies are investigated, and different market statuses are considered, including the IR’s remanufacturing technology choice, the competition in the remanufacturing market, the parties that are involved in remanufacturing authorization, which have different bargaining powers, and the case that the CM becomes a remanufacturing partner.