When does Remanufacturing versus new product manufacture pay off? Derivation of a commercial ReMan formula and decision logic based on empirical ratio analyses across multi company production data

Remanufacturing (ReMan) is an ecologically and economically promising production approach and business model for enabling a circular economy and conserving resources. However, its adoption across industrial sectors remains limited due to a lack of knowledge and guidance on the product characteristics and cost factors that support a profitable ReMan business. Therefore, this study derives a commercial ReMan formula linking those production cost metrics that significantly influence profitability with corresponding product characteristics. The formula is based on a ratio analysis of product characteristics and commercial data from successful ReMan cases (n=355) covering various product categories from two mechanical engineering companies. Our results show that the economic efficiency of ReMan business is primarily driven by increasing net and material costs, increasing weight, and greater product complexity including part count. In contrast, assembly costs, testing costs, logistics costs, overhead surcharges, and the expected CO2e-surcharge savings of ReMan products exert only a marginal impact on cost-effectiveness. Based on the findings, a ReMan formula and decision logic are developed, incorporating four identified key commercial metrics: (1) the value of reusable ReMan components, (2) repurchase price of the used product, (3) costs of disassembly, cleaning, and inspection of the used product, and (4) the price delta between new and remanufactured product. Future research could extend the derived ReMan formula by investigating absolute cost thresholds for critical ReMan activities, such as disassembly, cleaning, and inspection, to identify economic barriers limiting ReMan adoption, particularly in consumer goods markets and further industrial sectors.