Remanufacturer’s production strategy with capital constraint and differentiated demand

Remanufacturer’s recycle strategy is studied in this paper, taking into account capital constraint and differentiated demand. Three recycle models are considered, i.e. remanufacturer’s recycle from market, authorized retailers’ recycle from market, and authorized third-party recyclers’ recycle from market. Decision models with loan strategy and without loan strategy are respectively constructed for each recycle model. For each decision model, decision variants including wholesale price, retail price, recycle rate, optimum profit etc. are analyzed; conditions under which remanufacturers adopt loan strategy are proposed; supply chain members’ profit change when loan is available is analyzed. In the end, remanufacturer’s recycle model selection strategy, as well as government’s concessional loan strategy that encourages remanufacturers to recycle more, are put forward. The research has the following findings: (1) Other than waste’s processing cost, recycling cost and consumer preference, the amount of remanufacturer’s self-owned capital and loan rate are key factors that influence remanufacturer’s loan decision; (2) compared to non-loan strategy, profit of remanufacturer and third-party recycler increases when loan strategy is adopted by remanufacturer, but it is uncertain for retailer’s profit; (3) When loan strategy is adopted, profit of each supply chain member decreases when loan rate increases, no matter which recycle model is adopted; therefore government should decrease loan rate to encourage remanufacturer to recycle more and adopt loan strategy; (4) remanufacturer’s choice of recycle model depends on the cost comparison of self-owned recycle and outsourced recycle, whether loan strategy is adopted or not.