The Impact of Remanufacturing on the Component Commonality Decision

Using the classic market segmentation approach, we analyze the impact of a firm's remanufacturing operations on its component commonality decision. We find that the decision to make a component common or not may be reversed with the inclusion of remanufacturing, and this reversal is influenced by whether or not the candidate component requires reconditioning and the extent to which the component diminishes the perceived difference between the high and low-quality products. A large-scale numerical analysis shows that the detrimental impact on profit of not factoring in remanufacturing can be significant, provides guidance on the likelihood and severity of this impact under different conditions, and identifies the set of parameters that are the most important to focus on