"Product Reuse in Innovative Industries," Production and Operations Management


Authors: Galbreth, Michael; Boyaci, Tamer; Verter, Vedat

Publication: Production and Operations Management, 2013


Most models of product reuse do not consider the fact that firms might be required innovate their products over time in order to continue to appeal to the tastes of customers. We consider how the rate of this required innovation, which might be fast or slow depending on the product, affects reuse decisions. We consider two types of reuse–remanufacturing to original specifications, and upgrading used items by replacing components that have experienced innovation since the item was originally produced. We find that optimal reuse decreases with the rate of innovation, implying that models that ignore innovation overestimate the optimal amount of reuse that a company should pursue. Furthermore, we show that reuse can be encouraged in two ways–the intuitive approach of increasing end-of-life costs, and the less intuitive approach of raising the cost to make items reusable. We also examine the environmental impact of reuse, finding that reuse can actually hurt environmental performance in some cases. In an extension, we show how the results and insights change when the rate of innovation is uncertain