Selection of buyback price for OEM for efficient spare parts management in remanufacturing business

Ray, A.; Mondal, S.

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Uncertain Supply Chain Management

ISSN 2291-6830 (Online) - ISSN 2291-6822 (Print) Quarterly Publication Volume 4 Issue 3 pp. 233-248 , 2016

Selection of buyback price for OEM for efficient spare parts management in remanufacturing business Pages 233-248 Download PDF

Authors: Ankita Ray, Sandeep Mondal

DOI: 10.5267/j.uscm.2016.1.001

Keywords: Buyback price, Closed loop supply chain, Competition in remanufacturing business, Product recovery activity

Abstract: Authors developed a two-period buyback pricing model which shows a competition between independent repair shop, third party remanufacturer (TPR) and original equipment manufacturer (OEM) for market share in spare parts business after the end of warranty period. Remanufacturing is a profitable option for OEM rather than producing new parts after finishing the warranty period for satisfying the demand of spare parts. OEM acquires damaged/broken parts from local independent repair shop to remanufacture those parts. But if there existed any Third Party Remanufacturer (TPR) then it would lead competition and would decrease the market share of OEM in sales of spare parts. TPR is basically independent remanufacturer. OEM has no control over the activity of the TPR for selling remanufactured spare parts after finishing warranty period of the products. In this paper, authors considered a supply chain model, where independent repair shop is responsible for handling the repair process and both OEM and TPR are remanufacturing spare parts. Repair shop may procure spare parts from both OEM and TPR. A discount is given on the price of the spare parts by TPR which attracts the customers. Repair shop also tries to sell repaired parts at an attractive discounted price. Both TPR and OEM need to collect broken/damaged parts to remanufacture them for maintaining an inventory of spare parts. This paper aimed to develop a deterministic framework for finding optimal buyback price for the OEM and the impact of different parameters on the profitability of spare parts management for individual players of supply chain management.

How to cite this paper

 Ray, A & Mondal, S. (2016). Selection of buyback price for OEM for efficient spare parts management in remanufacturing business.Uncertain Supply Chain Management, 4(3), 233-248.

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