Warranty and Sustainable Improvement of Used Products through Remanufacturing

Currently, a large number of used/second-hand products are being sold with remanufacturing. Remanufacturing is a process of bringing used products to a better functional state and can be applied as a way for (1) controlling the deterioration process, (2) reducing the likelihood of a failure over the warranty period and (3) making the used item effectively younger. Remanufacturing is relatively a new concept and has received very limited attention. In this paper, we develop an important sustainable improvement approach for used items sold with failure free warranty to determine the optimal improvement level. Our model makes a useful contribution to the reliability growth literature, as it captures the uncertainty and suggests improvement in the remanufacturing process. By using this model, the dealers can decide whether and how much to invest in remanufacturing projects.