Selection of best buyback strategy for original equipment manufacturer and independent remanufacturer - game theoretic approach

The study considers two supply chain members, an original equipment manufacturer (OEM) producing new and remanufactured products and an independent remanufacturer (IR) collecting used products of OEM and producing remanufactured products. Furthermore, OEM and IR are involved in competition to collect the used products by providing various exciting offers to the customers. A two period analytical model is developed to investigate the profitable buyback strategy for OEM and IR under low and high pricing strategy. In first period, OEM performs remanufacturing and considers a strategy to collect the product cores from end users under a certain pricing strategy. Under extensive game format, IR joins in the remanufacturing business to compete with OEM and based on OEM's attractive buyback strategy, IR adopts a profitable pricing strategy. The research addresses oligopoly market where OEM is not the single seller of new product and other sellers are interested in remanufacturing. In such scenario, OEM has less control over used products collection of other brand and OEM cannot restrict independent remanufacturer to venture within remanufacturing business. The findings of the study depicted that low pricing strategy exchange offer is profitable buyback decision for OEM and incentive offer is profitable buyback decision for independent remanufacturer.

Automated summary

The study focuses on the competition and cooperation between OEM and IR in the remanufacturing market, analyzing their profit-driven buyback strategies. The findings suggest that the low-pricing strategy is a profitable buyback decision for OEM, while the incentive offer is a profitable buyback decision for IR.