Optimal remanufacturing choices with manufacturer’s quality disclosure

In practice, firms implement different combinations of strategies for quality disclosure and remanufacturing. However, it is unclear how these two strategies interact with each other. Motivated by real practice in industries such as automobile and electronics, this paper investigates the manufacturer’s quality disclosure strategy when remanufacturing is conducted by either himself or a third-party remanufacturer. We construct analytical models to integrate quality disclosure into remanufacturing operations and consider two types of remanufacturing, namely manufacturer remanufacturing (MR) and third-party remanufacturing (TR). Several interesting results are derived in our work: (i) With moderate remanufacturing savings, the manufacturer should induce the partial (full) remanufacturing strategy with disclosure (no disclosure) under both MR and TR scenarios. This indicates that the manufacturer could use the quality disclosure strategy to coordinate (affect) his (the third-party remanufacturer’s) remanufacturing operations strategy under MR (TR) scenario. (ii) MR may either enhance or reduce the manufacturer’s disclosure incentive, while TR always dampens it. (iii) Compared with MR, interestingly, from both ex post and ex ante perspectives, the manufacturer may prefer no remanufacturing (NR), even if the cost associated with remanufacturing is negligible. By contrast, compared with NR, the manufacturer will ex post welcome the third-party remanufacturer to enter the market.