Dynamic pricing models for used products in remanufacturing with lost-sales and uncertain quality

Yu Xiong, Gendao Li, Yu Zhou, Kiran Fernandes, Richard Harrison, Zhongkai Xiong

Research output: Contribution to journalArticlepeer-review

47 Citations (Scopus)

Abstract

In this paper, we investigate the remanufacturing problem of pricing single-class used products (cores) in the face of random price-dependent returns and random demand. Specifically, we propose a dynamic pricing policy for the cores and then model the problem as a continuous-time Markov decision process. We first design a basic model that does not consider the quality uncertainty of cores, and then extend our model to incorporate this factor. Besides proving optimal policy uniqueness and establishing monotonicity results for the optimal policy, we also characterize the impact of system parameters on the optimal policies, which can provide simple managerial insights. Finally, we use computational experiments to assess the benefits of dynamic pricing compared to static pricing and identify the impacts of specific parameters on the relative merits of dynamic pricing policy.
Original languageEnglish
Pages (from-to)678-688
Number of pages11
JournalInternational Journal of Production Economics
Volume147
Early online date22 Apr 2013
DOIs
Publication statusPublished - Jan 2014

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