Impact of Consumer's Anticipated Regret on Quality Decision of Remanufacturing Supply Chain

Abstract

Abstract:

This paper studies how anticipated regret of customers influences OEM's quality decision of remanufacturing supply chain. Based on consumers' demand function, we build and solve a quality competition model under two scenarios: one with anticipated regret and the other without. Then we use theoretical analysis and numerical simulation methods to analyze the result. Our analysis shows that under an imperfect monopoly market, the anticipated regret is expected to enhance the product price and quality so as to reduce demand; under a competitive market, the equilibrium quality of product is negatively related to the sensitivity of anticipated regret and heterogeneity of consumers. The raise of anticipated regret would decrease the price of two products, demand of new product and OEM's profit while improving the demand of remanufactured product and enhancing the threshold of the IR to enter the market. When the expected evaluation of remanufacturing product quality is high, the quality in a monopoly market is higher than that in a competitive market. In addition, under a competitive market, the demand of remanufacturing product shows it is correlated with sensitivity of anticipated regret while the latter would obviously increase the profit of IR and supply chain, consumer surplus and the total social welfare when the heterogeneity of consumers is at a low level, and vice versa.

Key words: anticipated regret, consumer heterogeneity, remanufacturing supply chain, quality decision

Gao Peng, Du Jianguo, Nie Jiajia, Lu Yumei. Impact of Consumer's Anticipated Regret on Quality Decision of Remanufacturing Supply Chain[J]. , 2018, 30(11): 234-246.

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