The Research About OEM Remanufacturing Decision And Perceived Value Impact

With the rapid development of the economics, resources consumption andenvironmental pollution are becoming increasingly serious, the waste productrecovery and remanufacture in recent years can not only save resources and protectthe environment, but also can help enterprise to save cost, create more profits, and soit becomes an important means of economic sustainable development. This articlemainly study manufacturing product market pricing mechanism an d the originalproduction manufacturer’s (OEM) decision of production, in view of the current ourcountry remanufacturing industry development problem, and based on differentiationdemand theory.Firstly, this paper introduces the relevant background and m eaningness about theresearch, reviews related research achievements, and discusses the connotation ofthe remanufacturing and the theory of customer perceived value. Analysis thedifference of demand between the remanufacturing product and new product, a ndintroduces some classical model about demand for different product.Secondly, We construct the demand function based on the consumer’s perceivedvalue for new products and the remanufacturing product, study the optimal pricing oftwo-stage OEM and the third party remanufacture, and get remanufacturing costconstraints; we can get OEM’s optimal production decision, after comparing thechanges of price、output and profit among only new products、OEM remanufacturingand the third-party remanufacturing; Analysis government subsidies utility of theOEM remanufacturing, and the government subsidy can promote the remanufacturingindustry development when remanufacturing cost is high, otherwise the governmentsubsidies will only lead to producers profit to consumers surplus transfer, governmentsubsidy can’t bring the pareto improvement. Although remanufacturing productscompete with new products, but the lower prices of remanufacturing product willbring market expansion, so the OEM choice remanufacture when remanu facturingcost is not too high.Finally, this paper consider that the emergence of remanufacturing product willaffect the consumer’s perceived value to the new product, on the basis of producthorizontal extension and vertical extension, we consider that the OEMremanufacturing will reduce the perceived value of new product, while the third party manufacturing will increase perceived value of new product. By introducing newproducts perceived value coefficient to the model, we analysis the OEM productionstrategy choice under different influence of new product perceived value; Consideringthe realistic production decision involves in many period, we extended two phasemodel to multiphase remanufacturing decisions, and analyze OEM optimal productionstrategy choice, and through the case to verify the conclusion. When we consideringthe influence of remanufacturing on new product perceived value, this paper showthat the OEM optimal strategy is to allow a third party to undertake remanufacturingwhen remanufacturing cost and perceived value influence can meet certain conditions.