The effect of secondary markets on remanufacturing decisions

Many manufacturers and retail companies have been experimenting for several years with products recovering options that allow an increasing product's inherent value recovery rate. The remanufacturing is one of these options and it has been receiving great attention from many OEMs. In remanufacturing case, the joint presence of high quality returns and demand for such products on secondary markets (e.g. emerging markets), makes the management deciding about allocating these units on these secondary markets rather than remanufacturing them and supplying the primary market. The aim of this paper is to address such strategic problem in the case of hybrid remanufacturing systems. A simulation model will allow to gain insight into such a system through some experimental campaigns and statistical data analysis tools. In particular, the factors that mainly impact its performance and the operating conditions in which selling on the secondary market is more profitable will be identified.