Remanufacturing: Making Sustainability Profitable

Remanufacturing is a process in which used products are disassembled and its parts are repaired and used in the production of new products. Although remanufacturing can improve the sustainability of business practices and has significant benefits for the environment, the society and companies, fierce competition and legislative challenges greatly hinder the sustainable development of the industry. Management acknowledges that it needs more sophisticated tools for making effective and differentiated remanufacturing decisions as well as support by legislation from the government. In this project, we will design new tools for remanufacturing, addressing measures of efficiency, profit, as well as sustainability. We propose a comprehensive analytical framework with three major components, namely: methods to assist decision makers with regard to how to finance the establishment of a reverse channel, how many returns to acquire, and how many new and remanufactured products to produce; 2) methods to assist in demand management and pricing for new and remanufactured products; 3) models that are capable of capturing system and market dynamics for cooperating and competing firms and financial service providers. We apply stochastic dynamic programming and optimization theory to characterise optimal strategies and apply game theory to explore the firms behaviours under competition and cooperation. Furthermore, we perform empirical investigations of current business strategies in remanufacturing industries. Finally, we use simulation to evaluate firms performance under the strategies derived from the analytical models and the strategies observed from empirical studies. Outcomes will address both national and international firms. Main deliverables are new decision-making tools with a strong theoretical base to provide guidelines for managers. Results can aid policy makers to design legislation for regulating the remanufacturing in order to improve eco-efficiency.