Application of adversarial risk analysis model in pricing strategies with remanufacturing

Abstract

Purpose: Purpose: This paper mainly focus on the application of adversarial risk analysis (ARA) in pricing strategy with remanufacturing. We hope to obtain more realistic results than classical model. Moreover, we also wish that our research improve the development of ARA in pricing strategy of manufacturing or remanufacturing.

Approach: In order to gain more actual research, combining adversarial risk analysis, we explore the pricing strategy with remanufacturing based on Stackelberg model. Especially, we build OEM’s 1-order ARA model and further study on manufacturers and remanufacturers’ pricing strategy.

Findings: We find the OEM’s 1-order ARA model for the OEM’s product cost C. Besides, we get according manufacturers and remanufacturers’ pricing strategies. Besides, the pricing strategies based on 1-order ARA model have advantage over than the classical model regardless of OEMs and remanufacturers.

Research implications: The research on application of ARA imply that we can get more actual results with this kind of modern risk analysis method and ARA can be extensively in pricing strategies of supply chain.

Value: Our research improves the application of ARA in remanufacturing industry. Meanwhile, inspired by this analysis, we can also create different ARA models for different parameters. Furthermore, some results and analysis methods can be applied to other pricing strategies of supply chain.