Optimal decisions in a dual-channel remanufacturing supply chain with reference quality effect under WTP differentiation

This study investigates a pricing problem in a dual-channel remanufacturing supply chain consisting of a manufacturer and a retailer with market segmentation and reference quality effects. In the era of e-commerce economy, the reference quality effect plays an increasingly important role in influencing consumers’ purchasing behavior, product pricing, and demand changes. It is crucial for manufacturers to develop optimal sales channels of remanufactured products based on consumers’ purchasing behavior. To this end, we study the manufacturer’s optimal decision problem in two classical business scenarios: selling remanufactured products through retail or direct channels. The objective is to explore the impact of the channel coefficient, remanufactured product acceptance, and the reference quality effect on optimal decisions in the remanufacturing supply chain, as well as their combined impact on profitability. The findings suggest that the reference quality effect has a negative impact on the manufacturer’s profit, and the optimal channel choice remains uncertain. Within a specific range, the reference quality effect hurts the profits of supply chain members. In addition, the extended model shows that the manufacturer’s profit is highest when the remanufactured product is sold in two channels, but the profits decrease as the reference quality parameter increases.