Collection strategies and pricing decisions for dual channel EOL products

Abstract This paper studies the collection strategies and pricing decisions involving End-Of-Life (EOL) products with competing dual collection channels. One channel collects the EOL products through an online platform and the other channel receives the products through a traditional channel. Allowing either channel to be the main collection channel, the collector of EOL products can be either a manufacturer or retailer. Four collection strategies are studied based on the main channel and the collector: Traditional channel & Manufacturer, Traditional channel & Retailer, Online channel & Manufacturer, and Online channel & Retailer. The optimal pricing decision of each strategy is found using two nested Stackelberg games. The manufacturer’s channel selection and the retailer’s response as the collector are discussed. A numerical study analyzes the effect of the acceptance rates of the EOL products collected, remanufacturing cost, and product collection cost on the pricing decisions, willingness to return, and the manufacturer’s and retailer’s profit. The results suggest that re-allocating the resources can enhance the value of the main collection channel and improve the retailer’s willingness to collect through a traditional channel. The optimal collection strategies for profitability are obtained and the strategies for a higher willingness to return discussed.