Optimal decisions in a remanufacturing supply chain under money‐back guarantees

Abstract

AbstractThis study establishes a remanufacturing supply chain (RSC) consisting of a manufacturer and a retailer, in which the retailer offers a money‐back guarantee (MBG) with a full refund for consumers, and investigates the pricing decisions in four remanufacturing cases by considering the quality of returns. Our results show that controlling remanufacturing costs can enable both members to achieve a win–win situation in most remanufacturing cases. When the consumer's acceptance level for remanufactured products is low (high), a high return rate of non‐defective returns losses (benefits) the retailer's profit but does not losses the manufacturer's profit.