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Remanufacturing and the Component Commonality Decision
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Firms often determine whether or not to make components common across products by focusing on the manufacturing and sales of new products only. However, component commonality decisions that ignore remanufacturing can adversely affect the profitability of the firm. In this article we analyze how remanufacturing could reverse the OEM's commonality decision that is based on the manufacturing and sales of new products only. Specifically, we determine the conditions under which the OEM's optimal decision on commonality may be reversed and illustrate how her profit can be significantly higher if remanufacturing is taken into account
ex ante
. We illustrate the implementation of our model for two products in the Apple iPad
TM
family.
SAGE Publications
Title: Remanufacturing and the Component Commonality Decision
Description:
Firms often determine whether or not to make components common across products by focusing on the manufacturing and sales of new products only.
However, component commonality decisions that ignore remanufacturing can adversely affect the profitability of the firm.
In this article we analyze how remanufacturing could reverse the OEM's commonality decision that is based on the manufacturing and sales of new products only.
Specifically, we determine the conditions under which the OEM's optimal decision on commonality may be reversed and illustrate how her profit can be significantly higher if remanufacturing is taken into account
ex ante
.
We illustrate the implementation of our model for two products in the Apple iPad
TM
family.
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