Strategic Optimization for Manufacturers and Recyclers Considering Differentiated Test Costs

Due to the uncertainty of remanufacturing costs, this paper discusses the evolution strategies of recyclers and manufacturers under differentiated test costs and manufacturer’s incentive mechanism. Based on theoretical analysis and sensitivity analysis of key factors, the results show that when the manufacturer’s test cost is low and no matter what the test cost of the recycler is, the dynamic system will evolve to the strategy {recycling and no test, test and remanufacturing}. When the manufacturer’s test cost is higher and the recycler’s test cost is lower, the system will evolve toward the strategy {recycling and test, no test and remanufacturing}. When the test cost for both subjects is relatively high, neither subject will test the recycled products. Additionally, the manufacturer’s incentive mechanism will impact the transfer price, but it will have almost no impact on the profits of both entities. In this context, regardless of how the initial state of the evolution game changes, the dynamic system cannot evolve toward the optimal equilibrium result {recycling and test, test and remanufacturing}.