Author(s): Shuoguo Wei and Ou Tang
Abstract: Challenges in the core acquisition process mainly result from the uncertainties of: return volume and timing, and core quality. Core acquisition management is to actively manage these uncertainties though various activities. This presentation aims to provide an overview of core acquisition management issues and then present a core quality classification/refund policies model for improving the acquisition management. Using quality classification methods, refund policies with different numbers of quality classes are studied. Under the assumption of uniformly distributed quality, analytical solutions for these refund policies are derived. Numerical examples indicate that the customers’ valuation of cores is an important factor influencing the return rates and the remanufacturer’s profit. Refund policies with a small number of quality classes could already bring major advantages. Credit refund policies (without deposits) are included for comparisons.