Replacement program decision-making and remanufacturing model selection considering consumer segmentation

Remanufacturing effectively addresses environmental pollution and resource waste, but impacts of TON (Trade-in for New), TOR (Trade-in for Remanufacturing), and TOC (Trade-in for Cash) coexistence on remanufacturing decisions and pricing have been understudied. We establish a Stackelberg model with OEMs and CMs to investigate this. The results show: (1) Manufacturers' replacement program choices mainly depend on the residual value of old products. In the authorization model, TON is implemented for products with low durability or insufficient residual value, and both TON and TOR for high residual value. In outsourcing, TON is consistently used; TOR is applicable only within a certain residual value range. (2) When TON, TOR, and TOC coexist, the remanufacturing model choice hinges on consumer receptivity to remanufactured products and the residual value of old products. Manufacturers prefer outsourcing for low receptivity, shifting to authorization as the residual value increases. (3) The market share of replacement consumers, the residual value of old products, and consumer receptivity affect supply chain members' pricing strategies and profits. With reduced market coverage and low residual value, OEMs benefit in both models, but CMs face disadvantages in outsourcing. Conversely, expanding market coverage and increasing consumer receptivity enable a win-win in outsourcing for both OEMs and CMs. Our study provides strategic guidance for determining the best remanufacturing models and replacement programs, and supports manufacturers in optimal pricing and product recycling strategies.