Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition?
Due to the supply chain globalization, technology-oriented original equipment manufacturers are focusing on their core competencies by outsourcing the production to contract manufacturers. Many contract manufacturers also engage in remanufacturing and provide high quality remanufactured products in...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2022
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/160763 |
| _version_ | 1811693746905939968 |
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| author | Zhou, Qin Meng, Chao Yuen, Kum Fai Sheu, Jiuh-Biing |
| author2 | School of Civil and Environmental Engineering |
| author_facet | School of Civil and Environmental Engineering Zhou, Qin Meng, Chao Yuen, Kum Fai Sheu, Jiuh-Biing |
| author_sort | Zhou, Qin |
| collection | NTU |
| description | Due to the supply chain globalization, technology-oriented original equipment manufacturers are focusing on their core competencies by outsourcing the production to contract manufacturers. Many contract manufacturers also engage in remanufacturing and provide high quality remanufactured products in the market posing competition to the new products. This paper considers a supply chain with an original equipment manufacturer and a contract manufacturer. The contract manufacturer produces new products for the original equipment manufacturer and may compete with the original equipment manufacturer by producing and selling remanufactured products. The original equipment manufacturer can determine whether to authorize the contract manufacturer's remanufacturing. This paper investigates the wholesale price and retail price decisions for the new product and the conditions under which an authorization agreement can be reached between the two parties. In the analysis, two wholesale price settings are considered, the exogenous wholesale and endogenous wholesale price settings. In addition, three authorization decision bargaining scenarios are examined, including the original equipment manufacturer determining the authorization fee, the contract manufacturer determining the authorization fee, and two parties negotiating the authorization fee, to analyze the authorization cooperation outcomes via the generalized Nash bargaining framework. The results show that when the contract manufacturer determines the authorization fee, an authorization cooperation can never be reached whether in the exogenous or endogenous wholesale price setting. The original equipment manufacturer is more likely to set an authorization fee that leads to an authorization cooperation between the original equipment manufacturer and the contract manufacturer, especially when the contract manufacturer collects and remanufactures all the used products. Multiple factors influencing authorization cooperation decision are investigated, including the exogenous and endogenous wholesale price, production cost of new and remanufactured products, bargaining power of the two parties, and consumers' preference for remanufactured products. |
| first_indexed | 2024-10-01T06:56:35Z |
| format | Journal Article |
| id | ntu-10356/160763 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T06:56:35Z |
| publishDate | 2022 |
| record_format | dspace |
| spelling | ntu-10356/1607632022-08-02T06:51:57Z Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? Zhou, Qin Meng, Chao Yuen, Kum Fai Sheu, Jiuh-Biing School of Civil and Environmental Engineering Business::Marketing Contract Manufacturing Remanufacturing Authorization Due to the supply chain globalization, technology-oriented original equipment manufacturers are focusing on their core competencies by outsourcing the production to contract manufacturers. Many contract manufacturers also engage in remanufacturing and provide high quality remanufactured products in the market posing competition to the new products. This paper considers a supply chain with an original equipment manufacturer and a contract manufacturer. The contract manufacturer produces new products for the original equipment manufacturer and may compete with the original equipment manufacturer by producing and selling remanufactured products. The original equipment manufacturer can determine whether to authorize the contract manufacturer's remanufacturing. This paper investigates the wholesale price and retail price decisions for the new product and the conditions under which an authorization agreement can be reached between the two parties. In the analysis, two wholesale price settings are considered, the exogenous wholesale and endogenous wholesale price settings. In addition, three authorization decision bargaining scenarios are examined, including the original equipment manufacturer determining the authorization fee, the contract manufacturer determining the authorization fee, and two parties negotiating the authorization fee, to analyze the authorization cooperation outcomes via the generalized Nash bargaining framework. The results show that when the contract manufacturer determines the authorization fee, an authorization cooperation can never be reached whether in the exogenous or endogenous wholesale price setting. The original equipment manufacturer is more likely to set an authorization fee that leads to an authorization cooperation between the original equipment manufacturer and the contract manufacturer, especially when the contract manufacturer collects and remanufactures all the used products. Multiple factors influencing authorization cooperation decision are investigated, including the exogenous and endogenous wholesale price, production cost of new and remanufactured products, bargaining power of the two parties, and consumers' preference for remanufactured products. 2022-08-02T06:51:56Z 2022-08-02T06:51:56Z 2021 Journal Article Zhou, Q., Meng, C., Yuen, K. F. & Sheu, J. (2021). Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition?. International Journal of Production Economics, 240, 108238-. https://dx.doi.org/10.1016/j.ijpe.2021.108238 0925-5273 https://hdl.handle.net/10356/160763 10.1016/j.ijpe.2021.108238 2-s2.0-85110494539 240 108238 en International Journal of Production Economics © 2021 Elsevier B.V. All rights reserved. |
| spellingShingle | Business::Marketing Contract Manufacturing Remanufacturing Authorization Zhou, Qin Meng, Chao Yuen, Kum Fai Sheu, Jiuh-Biing Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title | Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title_full | Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title_fullStr | Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title_full_unstemmed | Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title_short | Remanufacturing authorization strategy for an original equipment manufacturer-contract manufacturer supply chain: cooperation or competition? |
| title_sort | remanufacturing authorization strategy for an original equipment manufacturer contract manufacturer supply chain cooperation or competition |
| topic | Business::Marketing Contract Manufacturing Remanufacturing Authorization |
| url | https://hdl.handle.net/10356/160763 |
| work_keys_str_mv | AT zhouqin remanufacturingauthorizationstrategyforanoriginalequipmentmanufacturercontractmanufacturersupplychaincooperationorcompetition AT mengchao remanufacturingauthorizationstrategyforanoriginalequipmentmanufacturercontractmanufacturersupplychaincooperationorcompetition AT yuenkumfai remanufacturingauthorizationstrategyforanoriginalequipmentmanufacturercontractmanufacturersupplychaincooperationorcompetition AT sheujiuhbiing remanufacturingauthorizationstrategyforanoriginalequipmentmanufacturercontractmanufacturersupplychaincooperationorcompetition |