Revenue and Cannibalization: The Effect of Interchangeable Design Confronted Remanufacturing Processing

Traditional wisdom suggests that the interchangeable design in process system engineering, such as modularity or commonality design, can lower manufacturing cost and act a revenue driver. Moreover, will be efficient both assembling for new production disassembling remanufacturing. As such, confronted remanufacturing processing often involves balance of from drivers cannibalization effects Therefore, this paper studies how original equipment manufacturers’ (OEMs’) impacts decisions, well economy environment. Specifically, we develop two theoretical models, which an OEM makes strategic choice relating to interchangeability when operations are undertaken by itself (Model O) outsourced third-party remanufacturers T). This study finds that, although optimal level related product Model T is than O, quantity remanufactured products latter scenario always higher. outsourcing deters OEM’s on interchangeability, may consistent with fact Lexmark its less avoid (TPRs). Conversely, likely outsource independent remanufacturers, more beneficial environment, industry, society. These key insights environmental groups agencies suggest society depends OEMs’ attitudes towards profitability loss. Furthermore, eliminate above contrasting between other issues, possible remedies, including revenue-sharing contract subsidy-incentive mechanism, provided achieve “win-win” situation.