Seminar: “New Product Diffusion in Closed – Loop Supply Chains,” Barış Emre Kaya, Industrial Engineering Department, EA-202, 2PM February 9 (EN)


Title: New Product Diffusion in Closed – Loop Supply Chains by Barış Emre Kaya, Bilkent University, Department of Industrial Engineering

Thursday, February 9, 14:00



In this thesis, we develop a dynamic model for sales planning of a manufacturer who sells new and remanufactured versions of a product. Demand arrives over a finite life cycle according to the Bass diffusion process. End-of-use product returns required for remanufacturing are constrained by the earlier sales. In this setting the manufacturer may simultaneously improve its economic and environmental performance by partially satisfying the initial demand. This can indeed occur when innovators contribute more heavily than imitators to the diffusion process, remanufacturing is very cheap, or an unmet demand is very likely to be backlogged to be satisfied with a remanufactured product. But a very large backlogging rate may inflate the future demand if the initial sales volume is low, making it difficult to ensure a sufficient returns volume for remanufacturing. The manufacturer thus sells more under a very large backlogging rate, and a poorer environmental performance results. The optimal sales plans also differ across product types: The manufacturer of a search good has the advantage of keeping the future demand intact regardless of the initial sales, compared to the manufacturer of an experience good, because word-of-mouth is independent of consumption of search goods. Partially satisfying the demand can thus be desirable for search goods under a greater number of imitators, a higher remanufacturing cost, or a lower backlogging rate. However, if partially satisfying the demand is desirable for both product types, the manufacturer of a search good sells more to enable a sufficient returns volume for the larger future demand.