Heavy Duty Vehicle Clutch Remanufacturing for Market Cannibalization, Profitability and Environmental Benefits

Remanufacturing is a process in which used products are disassembled, and their components are repaired and used in the production of new products. This study investigates the impact of various remanufacturing decisions on Original Equipment Manufacturer (OEM) profitability and market cannibalization in an infinite-horizon production scenario for heavy duty vehicle (HDV) clutches. A discrete event simulation model is developed for benchmarking of different scenarios using various factors and their levels. There are two consumer segments as primary customer and grey customer in the market. Three different end of life (EOL) clutch quality conditions are defined, and three different percentages of clutch collect strategies are defined for all EOL products in the market. Therefore, a total of nine combinations (i.e., three quality index and three collecting strategies) are benchmarked in terms of total profit from new and remanufactured HDV clutches, number of customers won, and amount of saved raw material for environmental considerations. The study identifies effective remanufacturing strategies for different pricing decisions based on the EOL product quality index and the amount of collected EOL product. The results show that the OEM profitability of remanufacturing operations is tightly linked to the interaction between the EOL product and percentage of collected EOL products affecting pricing strategies, however a market cannibalization shows up between new and remanufactured HDV clutches.