Pricing and recovery planning for demanufacturing operations with multiple used products and multiple reusable components

In this study, we consider a pricing and recovery planning problem encountered in demanufacturing where multiple types of reusable components can be recovered from multiple used product quality groups. The problem is to maximize the net profit of the demanufacturer by characterizing the optimal acquisition prices of the used products and selling prices along with recovery quantities of the reusable components. To address this problem, we develop a mathematical model and analyze the structural properties of an optimal solution to this model. We propose a solution algorithm that exploits these structural properties. Results from a comprehensive computational study shows that the proposed algorithm is very efficient and can be used in practice to address the large-sized instances of the problem. We also present a polynomial time algorithm for a special case of the problem of interest where there is a single used product quality group.