Modeling the Time-Varying Advantages of a Remanufactured Product: Is “Reman” Better Than “Brand New”?1

Abstract

In order for remanufacturers to succeed in the market, it is important for them to be capable of ensuring in advance that a product is suitable for remanufacturing and that a remanufactured product will provide greater economic and environmental value than a brand-new product. This paper provides an approach to estimate the economic and environmental advantages of a remanufactured product. Focusing on the fact that advantages are greatly influenced by the nature of a product (i.e., its design and lifetime characteristics) as well as the timing of the remanufacturing, this paper proposes a model for assessing the time-varying advantages of remanufacturing a given product. The model provides an objective, quantitative method to compare a remanufactured product with an equivalent brand-new version of the product. Focus is placed on three perspectives: unit production cost, environmental impact, and net profit. By providing a multidimensional assessment tool for measuring product remanufacturability, the model is expected to assist remanufacturers make informed and effective decisions concerning product planning. It also helps marketing activities by supporting an effective sustainability communication with customers. Two versions of the model are presented, each of which targets a specific product type: (1) a product with only physical deterioration and (2) a product with both physical deterioration and technological obsolescence. Each version of the model is illustrated by utilizing an automotive alternator and a desktop computer, respectively.