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Remanufacturing is a production strategy whose goal is to recover
the residual value of used products. Used products can be
remanufactured at a lower cost than their initial production
cost, but remanufactured products are valued less than new
products by consumers. The choice of production technology
influences the value that can be recovered from a used product.
In this paper, we solve the joint market segmentation and
production technology selection problem faced by a manufacturer
who considers introducing a remanufacturable product in a market
that consists of heterogeneous consumers. Our analysis delineates
the product and market characteristics that dictate whether
producing a remanufacturable product is profitable, and reveals
the importance of the integrated management of new and
remanufactured product lines.
